Bill Ackman’s hedge fund just sold 5 million shares in Valeant

William Ackman’s hedge fund Pershing Square Capital Management sold approximately 5 million shares in the pharmaceutical giant Valeant International “to generate a tax loss for their investors”.

In a recent regulatory filing Pershing said that its stake in Valeant is now equivalent to 8.5% of the company’s shares (or 29.1 million shares) valued at about $2.96 billion.

It may come as a surprise to some, especially given Ackman’s vocal support of drug company. At one point Ackman said that he would have bought more stock in Valeant if he had the funds.

The sale comes only a month after the hedge fund increased its stake in the pharmaceutical company to 9.9% from 5.7%. Ackman held a four-hour conference call with investors at the time to express reasons behind his support for the troubled drug company.

But Valeant’s less than stellar performance last year weighed on Ackman’s returns.

Ackman’s publicly traded entity Pershing Square Holdings was down 19.7% as of December 29th.

Shares in Valeant have dropped 61% since last year’s high of $260 reached in early August, and closed the year down 22% at $101.67.

Valeant’s business model has been scrutinized by many in Wall Street.

Unlike other pharmaceutical companies, Valeant’s primary growth strategy has been through making acquisitions, sometimes in the multibillion-dollar range, of other medical and pharmaceutical firms. It doesn’t have a significant (if any at all) presence in the research and development of new drugs, but rather focuses on acquiring rival firms to build its portfolio.

It’s also received criticism over its strategy of exponential price increases on lifesaving medicines, which was described by Berkshire Hathaway Vice Chariman Charlie Munger as “deeply immoral” and “similar to the worst abuses in for-profit education.”