The Morning Brief: Pershing Square Reduces Stake in Valeant

Bill Ackman’s Pershing Square Capital Management has sold nearly 3.5 million shares of Valeant Pharmaceuticals International, according to a regulatory filing. By activist Ackman’s own admission, the embattled drugmaker is his worst investment. The shares were sold only from the accounts of the hedge fund firm’s two onshore partnerships, which comprise U.S.-taxable investors, to generate a 2016 tax loss for their investors. The onshore Pershing Square International and Pershing Square Holdings funds didn’t part with any shares. This isn’t the first time that Pershing Square, which sold all of the shares on December 12 for $14.85 apiece, has unloaded Valeant stock for tax purposes. Just before year end in 2015, its two onshore funds sold just over 5 million shares. Pershing Square now owns 7.8 percent of the company’s stock, which closed at $14.78 on Tuesday, up 0.68 percent. Valeant is down 86 percent for the year.

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Atlantic Investment Management has disclosed that it owns 5.1 percent in Diebold Nixdorf, the maker of ATMs and security systems. In an initial 13D filing, the sometime activist hedge fund firm headed by Alexander Roepers said that it bought the shares of the recently merged company for investment purposes. Atlantic revealed that it has talked to and expects to keep communicating with management, the board of directors, other shareholders, industry analysts, possible strategic partners or competitors, and fellow investment professionals about a number of matters. Those issues include the company’s business, management, capital structure and allocation, corporate governance, board composition, and strategic alternatives and direction. Atlantic also warned that it may take other steps aimed at boosting shareholder value. However, the New York firm conceded that it “has no present plans or proposals.”

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Raging Capital Management has sold more than 700,000 shares of TheStreet, reducing its stake in the online financial media company to 6.3 percent.

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November saw several hedge funds report sharply opposite results. For example, Odey European lost another 9 percent last month, leaving it down 47.7 percent year-to-date. On the other hand, Richard (Mick) McGuire’s Marcato International surged 12.2 percent in November. The activist fund is now up 10.8 percent for the year.

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Hedge fund flows measured by the SS&C GlobeOp Capital Movement Index have climbed 0.24 percent in December, indicating net inflows. This increase is smaller than the 0.75 percent rise in December 2015.

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