It looks like one of the biggest hedge fund investors in Valeant sold some of its stake

Lone Pine Capital, the hedge fund led by Stephen Mandel, appears to have sold some of its stake in embattled Canadian drug company Valeant Pharmaceuticals, according to a new investor letter seen by Business Insider.

Lone Pine’s Cascade fund, a long-only fund, placed Valeant as its 17th largest equity position (2.1% of the portfolio) at the end of December.

CNBC reported in September that Valeant was the Cascade fund’s top investment, making up 4.9% of the portfolio, suggesting that Lone Pine has since sold some of its stake.

A spokesperson for Lone Pine declined to comment.

There was no other commentary in the letter regarding Valeant other than a brief mention:

Despite some recent capital market reticence, historically low interest rates still provide an opportunity for value creation for companies that can improve acquired businesses. Investments in this area include Alimentation Couche-Tarde, Altice, Constellation Software, Dollar Tree, Fleetcor, Hanesbrands, Horizon Pharma, Transdigm, Valeant Pharmaceuticals and Visa.

Valeant’s stock has fallen more than 39% since October 21, when Citron Research, the short-selling firm run by Andrew Left, published a report suggesting Valeant was operating an Enron-like fraud.
The report focused on the company’s relationship with Philidor, a specialty pharmacy that distributed prescription drugs for Valeant. Citron accused the company of using Philidor to book phantom sales.

Valeant denied any wrongdoing, and severed ties with Philidor. In December, Valeant teamed up with Walgreens for a new distribution deal.

Lone Pine, which manages a number of funds (Cypress, Kauri, Cascade, and Tamarack), last held 5.31 million shares, or a 1.56% stake, in Valeant as of the third quarter ended September 30.

Lone Pine first initiated its position in Valeant in the first quarter of 2013. The stock had been a big winner until 2015, and was a favourite stock with a number or hedge funds.

Hedge funds are required to report their long equity holdings 45 days after the end of each quarter. The fourth quarter long positions won’t be revealed until mid-February when 13-F filings begin to come out.

Lone Pine’s Cascade fund rose 1.4% in the fourth quarter to end 2015 down 1.2%, the letter said.

Meanwhile, Lone Pine’s Cyprus fund rose 4.6% in the fourth quarter, ending the year up 8.7%, while its Kauri fund rose 4.4% in the quarter to end 2015 up 8.9%.

Here are Lone Pine’s Cascade’s fund’s 20 largest equity positions as of December 31, 2015:

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