Billionaire investor William Ackman is set to face close questioning on Wednesday when he details his hedge fund’s biggest-ever quarterly loss and explains how he plans to handle the investment that led to the fall—Valeant Pharmaceuticals International (VRX).
Ackman’s Pershing Square Capital Management has blocked off one hour on Wednesday morning for him and his analysts to walk investors through exactly how one of its funds lost 25% in the first three months of 2016, including bets on Platform Specialty Products (PAH), Herbalife (HLF), and Valeant.
The losses are a severe blow for one of the hedge fund industry’s most closely followed investors and come on top of a record 20.5% drop in 2015.
He has already told investors that he plans to take a far more active role in Valeant and last month joined the company’s board, cementing his commitment to the company for some time. The board is looking for a new chief executive and is committed to filing a long-delayed annual report by the end of April.
Ackman is sure to be pressed for details on all those issues in the call, which is a regular quarterly update with investors.
A spokesman for Ackman declined to comment.
Five months ago Ackman held a call that lasted nearly four hours as he tried convince investors that Valeant was still a good buy. That message seemed to fall on deaf ears as the stock price has tumbled nearly 70% since then.
Ackman lost roughly $1 billion on his Valeant investment in one day last month when its stock fell 50% on fears it could default. That prompted even long-time Valeant supporters such as Brave Warrior Advisors’ Glenn Greenberg to liquidate half of his stake.
Overall, Ackman’s investors appear to be sticking with him. Redemption requests for the first quarter totaled roughly 2% of the firm’s roughly $12 billion in assets.
“This is going to be a badly scraped knee that may even require stitches but it is not life threatening,” one Ackman investor said about the losses and Valeant situation.
The structure of Pershing Square shields it from a sudden sharp loss of capital—investors can only withdraw their money gradually and some of them can only exit by selling shares to another investor.
In a rare piece of good news, Valeant said on Tuesday that it has finished an internal review and found no additional problems that would require further restatements of its financial statements. Its shares climbed 10%.