“I disagree that Ubben is a class act,” tweeted hedge fund manager John Hempton a few weeks ago. The debate over ValueAct has also taken place on Twitter. The Economist surveyed Ubben and another activist hedge fund manager caught in the Valeant controversy, Bill Ackman, and wondered: “why should anyone listen to what they say?” Andrew Ross Sorkin wrote in The New York Times that ValueAct and Ubben deserve “credit-and perhaps a large dose of disapproval-for virtually everything that’s happened to the company over nearly the last decade, both good and bad.” Ubben has fired back, pointing on CNBC to “the short sellers and the media, you know, that are dying for some new crisis like Enron.” “I am telling you it’s too short term,” said Ubben.īut now that ValueAct’s 10-year investment in Valeant has led to stock market train wreck, the media has started taking shots at Ubben. In 2014, he blasted his activist investor peers for tactics like pushing for share repurchases or asset spinoffs to quickly boost stock prices, saying their investment time frames were hurried and frequently leaving companies worse off in the long run. It’s a perception that Ubben has embraced. He has sometimes been cast as a more responsible hedge fund activist than the quick-flip artists who are often criticized. Ubben is known for making long-term private equity-style investments in publicly-traded companies where ValueAct has influence but not control. The legacy of ValueAct’s Valeant investment and the virtue of Ubben’s ideas about long-term activism are now part of the debate swirling around the company. “We are again compelled to reduce our position to rebalance our overall portfolio.” With the stock recently changing hands for $28.87, ValueAct still owns shares worth about $430 million. “Mike Pearson and the Valeant team’s exceptional performance have once again caused our investment in Valeant to grow in value to well above 20% of our funds’ assets,” ValueAct said at the time. Ubben’s hedge fund invested $650 million in Valeant and pocketed $1.8 billion in stock sales and dividends, which include the nearly $1 billion of Valeant stock that ValueAct sold in June 2015, mostly for $219 per share. According to a 2013 New Jersey Investment Council document, inside capital makes up 7% of ValueAct assets under management, meaning that about $1.2 billion belongs to Ubben and his partners. He sold a 23% stake of his hedge fund firm to Affiliated Managers Group in 2007. ValueAct Capital’s main hedge fund has returned 15.5% annualized since its inception in 2000. Ubben has built an amazing hedge fund business. The Valeant investment helped fuel ValueAct’s returns and its assets, which recently stood at $17 billion. ValueAct has had almost uninterrupted representation on Valeant’s board since 2007 and currently has two board seats. Ubben’s hedge fund managed some $3.5 billion and was relatively obscure when it first made a $200 million investment in Valeant back in 2006. Even before it became a stock market disaster, the company was seen by many in the healthcare industry as a public policy disaster, encouraging the slashing of research and development in the pharmaceuticals sector, the firing of many employees, and the mind-boggling increase in the cost of drugs both through price hikes and dodgy tactics to get patients and insurers to pay for them.įor a decade, Ubben’s ValueAct has been a big part of the Valeant story. But Valeant Pharmaceuticals is probably the company that ValueAct has been best known for building and Valeant’s stock has plunged by 90% from its highs last August. Over the years, Ubben and ValueAct have made great investments in companies like Adobe, Gartner and Microsoft, and backed changes that made them better.
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