May 16, 2016 / 8:52 PM / 2 years ago

Regulatory filings show which Valeant investors exited in Q1

BOSTON, May 16 (Reuters) - Some of Valeant Pharmaceuticals International Inc.’s most loyal supporters lost hope during the first quarter and either exited the embattled company or significantly cut back their stakes, regulatory filings released on Monday show.

Brahman Capital, which had been invested in Valeant for more than five years and committed roughly one-quarter of its capital to the company, liquidated its position by selling 8.2 million shares, its filing shows.

Senzar Asset Management, which had put nearly 15 percent of its assets in Valeant, said in a filing that it also exited its position, having sold 1.3 million shares.

Brave Warrior, a Valeant investor for more than four years with roughly one quarter of its capital invested in the company, slashed its stake by 67 percent. The fund sold 4.2 million shares during the quarter, its filing shows.

Even hedge funds that had not put as much money to work in Valeant exited the stock, filings show.

Viking Global Investors exited, selling 7.8 million shares. Iridian Asset Management liquidated its entire holding of 4.3 million shares while Coatue Management sold its entire holding of 1.7 million shares and Jana Partners got rid of its 1.6 million shares.

Valeant’s troubles in the first quarter are well documented and came to a head on March 15. The share price skidded 50 percent when former Chief Executive officer Michael Pearson, back after a long medical leave, said the company would not meet its earnings goals and might default on its debt.

But which investors had made big moves in Valeant became clear only on Monday, when hedge funds were required to submit quarterly filings to the Securities and Exchange Commission. While so-called 13-F filings, showing which stocks investment managers owned at the end of the previous quarter, are backward- looking, they are still watched closely for possible trends.

Valeant had been one of the pharmaceutical industry’s most widely owned stocks as its steady stream of acquisitions fueled strong stock gains. But questions about its accounting and business practices, coupled with lawmakers’ concerns about sharp price hikes, clouded its prospects last summer. In the last 52 weeks, its stock tumbled 87 percent.

Still, the company had its supporters and filings show that a few hedge funds added to their bets during the first quarter. Okumus Fund Management nearly doubled its holding to 3.7 million shares, while Farley Capital raised its stake by 38 percent to 378,458 shares. It also bought call options on 17,000 shares. Farallon Capital bought 219,700 shares to own 269,700 shares at the end of the quarter.

Most notably, Pershing Square Capital Management, the company’s biggest public supporter with a 9 percent stake, put its founder and vice chairman on Valeant’s board during the first quarter. (Reporting by Svea Herbst-Bayliss; Editing by Dan Grebler)

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