By Svea Herbst-Bayliss
BOSTON (Reuters) - Wall Street's savviest investors are picking sides on Bill Ackman's new bet on Valeant Pharmaceuticals (NYSE:VRX) International Inc (TO:VRX), with BlueMountain Capital and T. Rowe Price adding money, while Viking Global Investors and Jana Partners cut stakes.
With its stock up 56 percent since January, the Canadian company is giving new and existing investors plenty to cheer about. In the last 52 weeks, it has risen 80 percent, outperforming both the S&P 500 Index and the Pharmaceuticals sub-index. The shares closed at C$270.02 ($224.63) on the Toronto stock exchange on Friday.
When the serial acquirer bought Salix Pharmaceuticals Ltd earlier this year, some investors were tempted to get in on the mergers and acquisitions boom now sweeping the drug industry.
T. Rowe Price bought an additional 2.3 million Valeant shares, raising its stake 12 percent to 20.1 million shares at the end of the first quarter, according to filings made on Friday with the Securities and Exchange Commission.
Hound Partners increased its stake by 22 percent and reported holding 2.6 million shares on March 31.
BlueMountain Capital Management raised its bet 356 percent during the first quarter, buying 723,682 shares to boost its stake to 926,919 shares.
Adage Capital Management listed a new position of 50,000 shares, according to SEC documents.
Big backers ValueAct Capital and Ruane Cunniff & Goldfarb largely kept their positions unchanged at 19.3 million and 34.3 million shares, respectively.
The biggest new backer was, Ackman's Pershing Square Capital Management, which bought 19.5 million shares during the quarter, according to a filing made in March.
Speaking publicly about his bet for the first time earlier this month, Ackman called Valeant an early stage Berkshire Hathaway Inc (N:BRKa).
Valeant Chief Executive Officer Michael Pearson (LONDON:PSON) has engineered roughly 100 deals, the most recent being earlier this year when the company outbid a rival to win Salix Pharmaceuticals. The win helped wipe away some memories of last year's bruising loss in its bid to buy Allergan Inc (NYSE:AGN).
Ackman acknowledged, however, that Valeant is hard to value, and clearly some investors were worried enough to cut back.
Viking Global Investors reduced its stake by more than half, to 4 million shares at the end of the quarter, while Jana Partners slashed its holdings 63 percent to 1.57 million shares.
Iridian Asset Management owned 3 million shares after cutting its holding by 22 percent. Brave Warrior trimmed its holding by 4 percent to 5.9 million shares, and Lone Pine Capital cut its stake 32 percent and owned 5.6 million shares at the end of the quarter.
Meanwhile, Sachem Head, run by former Ackman protege Scott Ferguson, opened a new position in Salix, buying 725,000 shares.