Prominent funds piled into Valeant ahead of tailspin

Mon Nov 16, 2015 6:25pm EST
 
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By Svea Herbst-Bayliss

NEW YORK Nov 16 (Reuters) - Some of the world's biggest hedge funds extended bets on Valeant during the third quarter, only weeks before the pharmaceutical company's stock went into a tailspin after criticism over its pricing strategy and accounting practices.

Andreas Halvorsen's Viking Global Investors, long a top performing fund, bought 376,615 Valeant shares sometime between July and the end of September to own 4.9 million shares at the end of the quarter, according to a filing made on Monday.b

Brahman Capital raised its stake by 958,300 shares to own roughly 4 million shares while Hound Capital bought an additional 1.2 million shares, making Valeant the fund's biggest position with nearly 4 million shares, the filings show.

Marble Arch, Blue Mountain, Farallon and Adage also spent more money on Valeant during the summer months after Valeant became one of the market's best performers during the first half of the year, notching gains on an aggressive acquisition strategy.

To be sure, the regulatory filings are backward looking and do not show what the funds now hold.

But their purchases were ill-timed. Valeant stock has cratered 70 percent in the last three months, hit by criticism from high-profile politicians like Hillary Clinton over its policy of raising prices for drugs gone off patent and allegations it used a mail order pharmacy to inflate revenues.

Valeant has denied the allegations.

Blue Mountain, for example, told investors that it exited the stock in October but held out the possibility of getting in again in the future.   Continued...