ADVERTISEMENT
ADVERTISEMENT

Here's the Bill Ackman apology Wall Street's been waiting for (VRX)

Bill, this is growth.

null

Hedge fund billionaire Bill Ackman is not known around Wall Street for his humility. But after riding Valeant Pharmaceutical's stock down from a peak of $279 in 2015, to around $11 this month, he has something to say to his investors.

"Clearly, our investment in Valeant was a huge mistake," he wrote in Pershing Square's 2016 annual letter.

"The highly acquisitive nature of Valeant’s business required flawless capital allocation and operational execution, and therefore, a larger than normal degree of reliance on management. In retrospect, we misjudged the prior management team and this contributed to our loss. We deeply regret this mistake, which has cost all of us a tremendous amount, and which has damaged the record of success of our firm. "

You'll recall that Valeant crashed in October of 2015 under the weight of scrutiny over its pricing practices and accusations of malfeasance from a short seller. That month, management also revealed that it was hiding a secret mail-order pharmacy within the company called Philidor — a pharmacy that is now being investigated for fraud.

ADVERTISEMENT

You may also recall that, as early as 2014, investor the founder of hedge fund Kynikos Associates, was calling Valeant a rollup. That is to say, it was a company that needed a steady stream of acquisitions to show growth and survive.

Ackman denied that Valeant was a rollup throughout his years-long relationship with the company. But he sort of admits that he was wrong about that in his annual letter.

He says one of his mistakes was failing to understand how hard it is to keep a rollup going, essentially:

Management’s historic ability to deploy capital in acquisitions and earn high rates of return is not a sufficiently durable asset that one can assign material value to in assessing the intrinsic value of a business.

Ackman also said that he clearly made Valeant far too large a position in his portfolio, that any management team can make mistakes, and that a "

ADVERTISEMENT

My approach to mistakes is that I personally assume 100% of the responsibility on behalf of the firm while sharing the credit for our successes. While I and the rest of the Pershing Square team have suffered significant losses from this failed investment as we are collectively the largest investors in the funds, it is much more painful to lose our shareholders’ money, and for this I deeply and profoundly apologize."

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.
ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng

Recommended articles

Here's everything to know about being a virgin on your wedding night

Here's everything to know about being a virgin on your wedding night

7 do's and don’ts of the Holy month of Ramadan

7 do's and don’ts of the Holy month of Ramadan

Top 5 sweetest celebrity mother-child relationships that stand out for us

Top 5 sweetest celebrity mother-child relationships that stand out for us

International Women's Day: 5 Nigerian female celebrities championing women’s rights

International Women's Day: 5 Nigerian female celebrities championing women’s rights

Top 5 female directors in Nollywood

Top 5 female directors in Nollywood

6 things that will break a Muslim's fast during Ramadan

6 things that will break a Muslim's fast during Ramadan

5 benefits of fasting during Ramadan

5 benefits of fasting during Ramadan

5 reasons Easter was more fun when we were children

5 reasons Easter was more fun when we were children

Dos and don’ts of supporting Muslims during Ramadan

Dos and don’ts of supporting Muslims during Ramadan

ADVERTISEMENT
ADVERTISEMENT