Skip to Content

These Investors Bet on Allergan Just Before Its Deal With Pfizer Collapsed

Pfizer Inc. Headquarters As They Agree To Combine With Allergan Plc In $160 Billion DealPfizer Inc. Headquarters As They Agree To Combine With Allergan Plc In $160 Billion Deal
Ian Read, chairman and CEO of Pfizer, left, and Brent Saunders, president and CEO of Allergan, in front of Pfizer headquarters in New York, on Nov. 23, 2015. They were all smiles then, but the deal didn't go through.Photograph by Bloomberg — Getty Images

Hedge funds, including Baupost Group, Davidson Kempner Capital Management and Magnetar Financial, made investments in Allergan during the first quarter, betting that the company would become the world’s biggest drug maker.

Seth Klarman’s Baupost Group bought 1.7 million shares during the first three months of 2016, while Davidson Kempner bought 833,099 shares and Magnetar bought 775,453 shares.

Similarly, Eton Park Capital and Maverick Capital nearly doubled the stakes their firms already owned. Eric Mindich’s Eton Park bought 926,504 shares and Lee Ainslie’s Maverick Capital bought 730,432 shares. Adage Capital Partners nearly doubled its holdings, buying 547,759 shares to hold 1.2 million shares.

The investments came weeks after Allergan (AGN) agreed with rival Pfizer (PFE) in November to a merger that was valued at more than $150 billion.

But their bet that the two companies would become the world’s biggest pharmaceutical company was wrong as the deal collapsed in early April and Allergan’s stock dropped.

The merger derailed due to U.S. Treasury action to curb inversions or where companies move abroad to cut taxes.

 

Some investors trimmed their Allergan stakes in the first quarter. Viking Global Investors cut it by 18% to own 4.8 million shares at the end of the quarter.

Senator Investment Group cut its position by more than half when it sold 875,000 shares and Third Point trimmed its holding by selling 400,000 shares to own 5 million. Jana Partners cut its stake by 718,000 shares to 447,000 shares and Omega Advisors cut its stake by about 221,000 shares to 561,000 shares. Hoplite Capital cut its stake by roughly half to own 299,825 shares.