This hedge fund manager killed it on his stake in Valeant

Activist investor Jeff Ubben, the CEO of hedge fund ValueAct Capital Management, has made a killing on his investment in Canadian pharmaceutical company Valeant.

Ubben, who is known for being even more long-term than your typical activist, purchased shares in Valeant about nine years ago in a price range of around $US11, according to the Wall Street Journal.

Last week, ValueAct said that it sold 4.2 million shares of its massive stake in the company. Those shares were sold in a range of $US219 and $US230.60 per share, the Journal reported. That works out to be a profit of at least $US873.6 million, according to our calculations. It’s not the first time ValueAct has some off some of its stake either.

Right now, ValueAct should have around about 15.18 million shares of Valeant, based on the fund’s most recent 13-F filing.

The Journal, though, points out that ValueAct no longer has an activist stake in Valeant. The fund’s position is now 4.4%, down from 5.6%.

Ubben, who took a seat on Valeant’s board in October, said in a statement last week:

“Mike Pearson and the Valeant team’s exceptional performance have once again caused our investment in Valeant to grow in value to well above 20% of our funds’ assets, and we are again compelled to reduce our position to rebalance our overall portfolio. We have owned Valeant shares for over nine years and have sold shares on three previous occasions for the same portfolio management purposes. After this sale, our investment in Valeant will continue to be well in excess of $US3.0bn and will be one of the largest investments in our funds. I look forward to continuing to work with Mike and my fellow members of the Board of Directors.”

Last year, Valeant was in the news a lot when hedge fund manager Bill Ackman, the CEO of Pershing Square, teamed up with Valeant 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.) Allergan was ultimately was acquired by Actavis in a $US66 billion deal and Ackman made a nice profit.

This spring, Ackman disclosed a passive stake in Valeant.

Here’s a 10 year chart of Valeant’s stock:

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