Top hedge funds flocked to Allergan amid bid backed by Ackman

Thu Aug 14, 2014 8:34pm EDT
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By Svea Herbst-Bayliss

BOSTON Aug 14 (Reuters) - Billionaire investor William Ackman, who often says he is flattered when others follow him into a stock he likes, was joined by several prominent hedge funds that made new bets on takeover target Allergan Inc during the second quarter.

Regulatory filings released on Thursday give the first comprehensive look at Allergan's redrawn shareholder map since Ackman and deal partner Valeant Pharmaceuticals Inc made public their pursuit of the Botox maker in late April. And while the data, released in so-called 13-F filings, is backward looking and could have changed in the 45 days since the end of the quarter, investors say that it gives at least a strong flavor for what savvy investors are thinking.

Ackman's Pershing Square Capital Management disclosed a 9.7 percent stake in Allergan at the time. By the end of June, John Paulson's Paulson & Co, Jamie Dinan's York Capital Management and Andreas Halvorsen's Viking Global Investors had also bought in, according to the documents released by the U.S. Securities and Exchange Commission.

The filings show that several large mutual fund firms that already owned Allergan made even bigger bets during the quarter. T. Rowe Price, for example, more than doubled its position, although it did not say exactly which funds owned the shares.

Paulson's moves have been tracked closely by investors since his winning bet against the overheated U.S. housing market. He has publicly supported Valeant's bid for Allergan, now worth about $49 billion. But many other shareholders have been silent and it was not clear who else had gotten in or gotten out.

In the last weeks, the fight for Allergan has become even more bitter. Proxy advisory firms are urging its shareholders to support Ackman's call for a special meeting to consider a deal.

Yet one of Valeant's top shareholders, hedge fund ValueAct Capital Management, suggested that Valeant may not be able to afford a drawn-out, damaging fight.

Allergan charged in a lawsuit filed earlier this month in California that Pershing Square broke insider trading laws when setting up its partnership with Valeant. Now U.S. securities regulators are asking questions about the planned takeover, a person familiar with the matter said on Thursday.   Continued...