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The Morning Brief: Ackman’s Pershing Square Takes Valeant Stake

He’s baaaack! William Ackman’s Pershing Square Capital Management has taken a 4.9 percent stake in Valeant Pharmaceuticals International, the company he teamed up with last year in a failed bid to buy Botox maker Allergan, according to a Wall Street Journalreport. Allergan would up being acquired by Actavis for $66 billion, while Valeant then agreed to acquire Salix Pharmaceuticals for roughly $10 billion. Pershing Square scored big with its Allergan investment nonetheless, easily making it the firm’s best performer in 2014, accounting for 19.1 percentage points of its main fund’s 53.1 percent gross gains. In response to Monday’s report, shares of Valeant — which is also the tenth largest holding among hedge funds with roots to Julian Robertson Jr.’s Tiger Management — surged 3 percent, to close at $204.69.

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Starboard Value’s Jeffrey Smith is once again putting pressure on Marissa Mayer, president and CEO of Yahoo. The New York activist sent the company a letter commending Mayer for announcing Yahoo’s plan to spin off its stake in Chinese e-commerce giant Alibaba. But Smith added, “Yahoo’s current valuation discrepancy cannot be solved just with the Alibaba spin-off,” writing, “Yahoo is in need of a major overhaul.” Smith calls on management and the board to separate the company’s Yahoo Japan stake in a tax-efficient manner and to repurchase $3.5 billion to $4 billion of stock, using excess cash.

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On yet another activist front, Keith Meister’s Corvex Management is putting pressure on the board of directors of American Realty Capital Properties, the embattled real estate investment trust. Since he initially disclosed a 7.1 percent stake at year-end, Meister has let it be known he has been pressuring the company to place him on the board. In a new filing, he continues this campaign, stressing that if the company is unwilling to add him prior to selecting a new CEO, he would be willing to join the board at the same time the CEO candidate is hired.

He also asserts that four specific directors should not remain on the board, citing their “ties with past affiliated entities and leadership” and their presence on the board “when a number of questionable transactions were approved.” He also raises concerns about “the significant compensation” approved by the board for chairman and CEO William Stanley. Meister maintains that an entirely new board slate should be presented at the next annual meeting. Last year the company disclosed it overstated financial results and intentionally concealed the error. Last week, the company restated results for 2013 and the first two quarters of 2014.

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A strong stock market propelled the average hedge fund to post a 1.93 percent gain in February, the best monthly gain since February 2014, according to data tracker eVestment. Activist funds rose 5.37 percent, on average, in February, according to eVestment’s monthly report. However, this came on the heels of a 3.61 percent loss for activists in January.

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