What We Can Learn From Valeant's Wreckage

The Valeant wreckage continues to smolder, and it will remain a tourist attraction for students of forensic accounting techniques for some time to come. For an informative look at the accounts of the people who have been holding its stock, check in with Matt Levine at Bloomberg. He’s gone through the public filings of Bill Ackman’s Pershing Square fund and has reasonable estimates of their stock and option positions in Valeant, and hoo boy. He believes that their break-even point is at about $161/share, and if that’s accurate then the traditional “underwater” adjective does not begin to describe where they are on this company. You need a robot submersible to explore these depths. Levine further estimates another inflection point, at just under $18/share, which is where Pershing Square will likely have lost their entire four billion dollar investment. I have no idea if they hedged this position somehow, as a. . .hedge fund might do, but Ackman himself delivered a four-hour exhortation back in October, complete with a massive slide deck that covered in detail just how incredibly right he was about investing in the company, so maybe not. He was only down a billion dollars at that point, though – good times, good times.