(Adds details on Rubin, Valeant bet)
By Svea Herbst-Bayliss
BOSTON, Aug 26 (Reuters) - Billionaire investor William Ackman said on Friday that Jordan Rubin, who had worked closely on Pershing Square Capital Management's controversial investment in battered drug maker Valeant Pharmaceuticals, is leaving the hedge fund.
"Rubin, a member of the investment team, will be departing shortly to pursue a startup venture outside the investment mangement industry," Ackman wrote in a letter sent to investors. Rubin had been there for seven years.
News of Rubin's departure comes roughly three months after William Doyle, another key figure in the bet, left Ackman's $12 billion Pershing Square.
This means all primary players who were instrumental in advising Ackman on making his Valeant bet in 2015 and then working on it as the company's share price plunged amid questions about Valeant's business and accounting practices are now gone. Ackman said that Jenna Dabbs, a former federal prosecutor who first joined Pershing Square's legal team, is now a member of the investment team.
At the same time, there has been a similarly significant change of personnel at Valeant after Ackman and his firm's vice chairman, Steve Fraidin, joined the board. Most recently, Valeant hired Paul Herendeen as chief financial officer from Zoetis, another company Ackman is invested in. Valeant also hired Christina Ackermann as its general counsel and Sam Eldessouky as its corporate controller.
Earlier this year there was pressure from investors to add managers with expertise in accounting and financial controls to the CEO's inner circle.
While Ackman is still considered to be one of the hedge fund world's best investors, he has had plenty of headaches in the last 12 months with his private fund down 14.5 percent through the middle of August. His average annual return over the last dozen years has been 12 percent.
Ackman said Valeant's drop cost his Pershing Square Holdings Fund 17.8 percent in losses in the first half of the year. By comparison his bet against Herbalife cost the fund only 1.2 percent in losses. With new management which has said that it plans to cut leverage and reduce debt by $5 billion over the next 18 months, Ackman said he expects the share price to "increase substantially." It has climbed 34 percent in the last month.
"There is a lot more work to do, but we are pleased with the company's progress over the last several months," he wrote. (Reporting by Svea Herbst-Bayliss; Editing by Sandra Maler)