Bill Ackman's biggest stock holding is getting hammered

Activist investor Bill Ackman’s biggest stock holding is getting demolished.

Shares of Valeant Pharmaceuticals plummeted on Monday after Democrats on the House Oversight and Government Reform Committee sent a letter to the committee’s chairman, Jason Chaffetz (R-UT), asking him to subpoena the pharmaceutical company for documents related to price increases of acquired drugs, Bloomberg News reported.

Valeant was last trading down $US26.39, or -13.23%, at about $US
173.08 per share. The stock had fallen as much as 20%. Biotech stocks across the board were lower on Monday.

In mid-March, Ackman disclosed that his fund bought 19,473,933 shares, or a approximately 5.7% stake, in the Canadian drug company.

Ackman, who is currently the largest shareholder, started building his position in the beginning of the year. Reuters reported back in March that his stake was worth about $US3.3 billion.

Ackman’s average share purchase price is unclear.

However, since disclosing the position, shares of Valeant have now fallen more than 20%. Most of the decline has happened in the last five trading days.

The stock had been one of Pershing Square’s winners in the first half of the year. In his second-quarter letter released in August, Ackman wrote that he thought Valeant shares “remain undervalued.”

“We believe that the stock price does not reflect the quality of Valeant’s franchises and future cash flows, and the business development, capital allocation and operating abilities of its management team,” Ackman wrote at the time.

Over a year ago, Ackman teamed up with Valeant and its CEO Mike Pearson to pursue a hostile takeover of Allergan, the maker of Botox. All of Ackman and Valeant’s offers were rejected.

At the time, Ackman didn’t own any shares of Valeant. He couldn’t own Valeant shares while they were working on the takeover together.

Ackman made more than $US2.6 billion on his position in Allergan after the company was acquired by Actavis in a $US66 billion deal in November. That deal helped Ackman become the most profitable hedge fund manager in 2014.

Pershing Square was last down about 4.8% for the year, according to an update from last Wednesday.

We reached out to a spokesperson from Pershing Square for comment.

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