Closely-followed hedge fund manager John Paulson sounded confident in a Valeant/Allergan deal at CNBC’s Delivering Alpha.
Paulson, who has been running his fund for 20 years, said it’s a “very exciting time” to be involved in merger arbitrage right now. He added that his fund tries to identify who is going to be acquired.
He recently disclosed a stake in Allergan, the maker of Botox.
Pharma company Valeant is attempting to make a hostile bid for Allergan in stock and cash. Valeant has teamed up with hedge fund manager Bill Ackman, who runs Pershing Square, to pursue the takeover.
So far, all three of Valeant’s bid have been rejected. He still sounded confident, though.
In the last few years, Valeant has made several acquisitions. Paulson called Valeant the poster child of an acquirer.” He added that the company is a “very serious acquirer” and “well managed.”
Valeant’s pursuit of Allergan is controversial, too.
Paulson explained that Valeant takes a different approach to managing companies than your traditional pharma. Valeant’s CEO eliminates things in the companies they acquire that he doesn’t feel are necessary or lucrative to the operation.
Paulson said he has a conference call with Ackman to discuss his effort to unseat Allergan board.
Ackman owns more than 28 million shares of Allergan.
“Allergan has a very aggressive shareholder in Ackman. Standing still is not an option,” Paulson said.
This is the second Delivering Alpha conference for Paulson. He rarely makes these kind of appearances. Last year, Paulson, who famously bet against subprime housing in 2007, said owning a home was the best investment an individual could make.
“I still think from an individual perspective the best investment is to buy a primary residence,” he said. “Today the cost of owning is somewhat less than renting.”