Valeant Stock Plummets… Again

Valeant front door

CBJ — The negative ramifications from a short-seller’s report accusing Valeant Pharmaceuticals of suspicious accounting practices has led to a massive 22% plunge in the stock’s value and closer scrutiny from the Quebec Securities Regulator.

This latest in a string of woeful events has also seen activist investor Bill Ackman swoop down and grab a large quantity of shares for what he no doubt believes is a bargain-basement price. Meanwhile, Valeant’s top five investors could have lost a combined $2.8-billion on Wednesday based on their holdings as of June 30.

It’s the latest twist in a fast-moving file that has seen Valeant’s stock price plummet 55% overall since its peak in August.

Valeant Pharmaceuticals responded by saying a short seller’s allegation that it recorded fake sales to phony customers was “erroneous,” mounting a defense of its relationship with specialty pharmacies that failed to assuage investors. The drug-maker responded after a report by Citron Research that sent its shares down as much as 40% at one point on Thursday before making a bit of a comeback as some people then looked to buy in, believing they’d be getting a good deal.

The stock-commentary site said Valeant is using a specialty pharmacy called Philidor RX Services to store inventory and record those transactions as sales. “Is this Enron part deux?” the report said. “These similarities are too close to ignore.”

Always the opportunist, the American billionaire Ackman scooped up 2.1 million additional shares.  The purchase means Ackman’s Pershing Square Capital Management is now Valeant’s second-largest shareholder, leapfrogging asset manager T. Rowe Price.