Embattled activist industry Bill Ackman on Thursday told hedge fund managers that his single biggest mistake with a particularly troubling large investment in Valeant Pharmaceuticals (VRX) was to rely on management at the drug company.
"We don't need to rely on management with the vast majority of our investments to get a good outcome," Ackman told hedge fund managers at the SALT conference at the Bellagio Hotel in Las Vegas. "Our biggest mistake at Valeant was that [our investment] was incredibly dependent on management judgement. We made a big mistake."
Ackman, who sought to restore his once bright reputation as a hedge fund superstar, said that the Valeant investment represented a disproportionately large amount of time and resources and he decided to sell it and realize a large tax loss. The activist accumulated a stake over time and accumulated even more as the drug company's shares dropped significantly. The stake was a big reason why Ackman's fund, Pershing Square Capital Management, reported an abysmal loss of 20.5% net of fees for 2015 and a loss of 12.1% after fees for 2016, even as the post-Trump stock market rally helped bolster other Pershing Square investments.
Nevertheless, Ackman tried to make the investment a teachable moment. "The most successful people i know are people who had a great run but at some point hit a difficult moment in time and the successful ones are the ones that deal with the difficult times correctly," he said.
Alternatively, Ackman preferred to discuss his investment and campaign at Chipotle Mexican Grill (CMG) , noting that Pershing Square accumulated a stake when the company's shares were artificially depressed due to a mini-crisis at the company due to a E. Coli and Salmonella outbreak at the burrito chain.