In a previous article we discussed some reasons why Bill Ackman (Trades, Portfolio) initiated a position in Valeant Pharmaceuticals International (VRX) to $3.87 billion, according to the fund's latest filing.
On Friday, shares were down about 2% to $228.83. According to the Wall Street Journal , there was a potential buyout offer to buy animal-health giant Zoetis (ZTS). Someone who is behind this move is activist investor Bill Ackman (Trades, Portfolio), who has taken a $2 billion stake in Zoetis and wanted the company to sell itself. Mr. Ackman also owns 5.7% of Valeant.
Valeant has made several acquisitions in order to become a leader in the market, with a market share of about 20%. It has acquired privately held Bausch & Lomb, a leading ophthalmology company, with the aim to reach economies of scale and synergies in this market. As an example, in mid-March the company closed an $11 billion acquisition of Salix Pharmaceuticals, after failing in an attempt to acquire Allergan (AGN).
Zoetis, a $25 billion market cap, plunged 12% on Friday, and maintained its previous level before the rally. The firm is the largest leader in the global animal health industry with almost one fifth of the market share. As economies of emerging markets are improving we expect more meat-heavy diets. In such markets, the firm has a scale which allows it to use its own salesforce. This is important because other competitors that are smaller need other expensive distributors.
Valeant is Pershing Square's first largest holding in its portfolio so let�s take a look at other funds which held the stock in their portfolios too. I always like to see which hedge funds have long positions in the stock because it inspires me to track the positions of famous hedge fund managers. Why? Because trying to imitate them, facilitates the task of picking "winning" stocks. But remember, 13F filings disclose hedge fund long positions in equities, ADRs, call and put options, as well as convertible notes. However, funds do not disclose short sales, which are the other (big) part of the story.
Having said this, we will see which funds invest in the company, apart from Pershing Square. Jeffrey Ubben�s Valueact Capital kept the second place with a value of $3.85 billion, with no activity in the quarter, but its position represents 21.3% of its total portfolio. Glenn Greenberg (Trades, Portfolio)�s Brave Warrior Capital had the third largest position in Valeant pharmaceuticals even after reducing its position by 5% to $1.17 billion. The stake represents 35.6%, which means that future performance will be very tied to the stock�s price evolution (the same will happen with Jeffrey Ubben�s portfolio).