Bill Ackman, who operates Pershing Square Capital Management, has conceded defeat with Valeant Pharmaceuticals International.
After he waged an outspoken and very costly public defense of Valeant, the controversial pharmaceutical company, he finally sold his complete stake at a loss and will step down from its board.
Exact figures are difficult to obtain, but public regulatory filings made by Pershing suggest the company might have lost as much as $2.8 billion on just the shares of Valeant it owned as of December 21, 2016, with losses overall of likely much more. Shares of Valeant have plummeted by more than 90%.
The big bets and the brash personality of Ackman have made him a polarizing name in investing. The decision made to give up his stake in Valeant comes following a lengthy attempt to turn the company around and to save his stake.
The sale of his stake ends a sage of nearly three years that first saw him team with Valeant in a hostile takeover bid for a rival prior to later making his own investment.
During the same period, federal regulators intensified their scrutiny of the pharmaceutical company, management and the board were overhauled and the value of the company plunged.
Pershing Square liquidated its entire Valeant share on Monday and said Ackman as well as fellow representative from Pershing Steve Fraidin would leave the Valeant board at its next annual meeting.
The investment is only between 1.5% and 3% of the entire funds of Pershing Square and required a large amount of resources and time that was disproportionate and therefore liquidated, said a statement released by Pershing.
During mid-December, Pershing held over 18.1 million common shares of Valeant stock, as well as call options for the purchase of more than 9.1 million shares, showed regulatory filings.
The average price paid by Pershing was $166.11 per share for the stock at Valeant that was purchased outright, not taking into account proceeds it received for stock sales that were subsequent to that or transactions involving options.
Based upon an average price it paid, the hedge fund would have suffered close to $2.8 billion in losses on its sale of more than 18.1 million shares held outright.
That assumes that the price of the stock that was sold was $11.25 per share, which is the midpoint of the current offering price.
Shares dropped to $10.30 on Tuesday, down close to 15% from their closing price on Monday.