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The Morning Brief: Valeant’s Crazy Day

It was a wild day for Valeant Pharmaceuticals International following its highly anticipated conference call with investors early Monday morning. The upshot: The stock closed down 5.27 percent, at $110.04. Shares had dropped as much as 14 percent in pre-market and even rose a bit during the day. Apparently investors were not totally convinced that all was well with the controversial drug company and that the stock is being bullied by a self-interested short seller. Valeant announced that its audit and risk committee and its entire board have reviewed the company’s accounting for its controversial relationship with Philidor and “confirmed the appropriateness of the company’s related revenue recognition and accounting treatment.” 
It also said it is in compliance with applicable law. However, given recent allegations, its board decided to establish an ad hoc committee to review allegations related to the company’s business relationship with Philidor and related matters. Meanwhile, Valeant announced that it added to its board of directors G. Mason Morfit, president of ValueAct Capital. He had served on the Valeant board from May 2007 to May 2014. Morfit, who now serves on the Microsoft Corp. board, joins fellow ValueAct partner D. Robert Hale, who has been serving on the Board since August. Several years ago, ValueAct’s Brandon Bozet sat on Valeant’s board. Since taking its initial stake in 2006, ValueAct has helped Valeant identify major cost savings and sell its pharmaceuticals pipeline so it could focus on its branded generics business, which was deemed to be less volatile. This enabled the company to slash its research and development budget. In 2008, ValueAct also recruited J. Michael Pearson from consulting firm McKinsey & Co., where he had spent 23 years, to serve as chairman and chief executive officer. In 2010, Biovail Corp. acquired Valeant for $3.2 billion and then retained the name Valeant.

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Hedge fund assets declined slightly in September, bringing total industry assets under management to $3.045 trillion, according to data tracker eVestment. Investors yanked $8.1 billion from the industry in September, while performance declined by $10.1 billion. Meanwhile, investors added just $2.8 billion to hedge funds in the entire third quarter, the smallest quarterly inflow of the year. The low third-quarter inflow is attributed to September’s redemptions, as well as outflows in July. “The industry appears to have entered a period of uncertain investor interest amid recent losses,” eVestment states in its report. Altogether, there were $72.1 billion in net inflows for the year, compared with $106.6 billion through the third quarter in 2014. The report asserts it is likely hedge fund flows will not surpass 2014 inflows of $88.3 billion and may even come in below 2013 inflows of $61.7 billion, citing recent losses and the trend over the past four years of investor redemptions in the final month of the year. Drilling down, eVestment points out that investors redeemed money from macro hedge funds for the first time in the past eight months.

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Leon Cooperman’s New York-based Omega Advisors boosted its stake in Atlas Resource Partners to 6.4 million shares, or 7.8 percent of the total outstanding of the master limited partnership, which develops and manages oil and gas properties.

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Hedge fund favorite The Priceline Group surged 3.65 percent, to close at $1,416.32, after briefly hitting an intraday all-time high.

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Pandora Media rebounded by more than 5 percent after the music streaming company plunged 35 percent on Friday.

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