Valeant’s stock soars as investors cheer poaching of Zoetis CFO
By Tomi Kilgore
Valeant Pharmaceuticals, of which Bill Ackman is the largest shareholder, poached its new CFO from Zoetis, another Ackman holding.
By
TomiKilgore
Reporter and editor
Shares of Valeant Pharmaceuticals International Inc. shot up to a 3½-month high in active trade Monday, as investors, who are led by billionaire activist investor Bill Ackman, cheered the company’s choice for its new financial chief.
Valeant VRX, +4.20% said early Monday that it was naming Paul Herendeen as its chief financial officer, replacing Robert Rosiello, effective immediately. Herendeen comes from fellow drugmaker Zoetis Inc. ZTS, +0.02% where he was named CFO on Aug. 14, 2014.
Valeant’s stock ran up $2.53, or 8.8%, to its highest closing level since May 5. The volume of 55.7 million shares was nearly double the full-day average, and enough to make the drugmaker’s stock the fourth-most actively traded on U.S. exchanges.
It’s no wonder investors were happy with Valeant’s CFO choice. Zoetis shares had closed Friday at a 14-month high of $52.54. Since Herendeen became CFO, the stock had run up 59% through Friday. In comparison, Valeant’s stock had plunged 74% over the same time, while the S&P 500 SPX, -0.11% had gained 12%.
On Monday, Zoetis’s stock slumped $1.31, or 2.5%.
Valeant’s largest shareholder is Ackman’s hedge fund, Pershing Square Capital Management LP, which owned about 21.59 million shares, or about 6.3% of Valeant’s shares outstanding, as of June 30, the latest regulatory filings show.
Coincidentally, Pershing also owned 21.17 million shares of Zoetis, or about 4.3% of the shares outstanding. Pershing is Zoetis’s sixth-largest shareholder, according to FactSet.
Zoetis on Monday named Glenn David, who was senior vice president of finance operations, to replace Herendeen as CFO. Another coincidence: David was given that SVP job on Aug. 14, 2014, the day he was replaced as acting CFO by none other than Paul Herendeen.
Ackman’s Pershing Square hedge fund may have lost $27.7 million on its Zoetis stake Monday, but the fund could have more than made up for it with a $54.6 million gain on its Valeant holding.
Valeant remains a risky bet for investors, following the recent disclosure of a criminal probe and large share sales by insiders. But the stock has still soared nearly 70% since closing at a six-year low of $18.73 on June 27, boosted by upbeat quarterly results, positive news on drug candidates and a deal with its debtholders.
Since June 30, the value of Ackman’s Valeant stake could have increased by $240.3 million.
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