Despite Bill Ackman and Steven Cohen's Bearish Sentiment, Allergan (AGN) Doubled the Stock Market

Billionaire Bill Ackman‘s hedge fund Pershing Square disclosed an equity portfolio valued at some $14.45 billion as of the end of the second quarter of 2015. The equity portfolio is mainly invested in Health Care (44%), Materials (27%) and Transports (15%) stocks. Pershing Square's last 13F filing showed that the positions remained almost constant over the quarter, but Mr. Ackman reduced his holdings in one stock. The seven largest holdings from Pershing Square's equity portfolio amass 100% of the total portfolio value. Among these companies are (in order of percentage of the portfolio):

  1. Valeant Pharmaceuticals International (VRX),
  2. Air Products & Chemicals (APD),
  3. Canadian Pacific Railway (CP),
  4. Zoetis Inc. (ZTS),
  5. Restaurant Brands International (QSR),
  6. Platform Specialty Products,
  7. Howard Hughes (HHC) and
  8. Allergan plc (AGN).

In this article, we will look into the only change made in the second quarter by Mr. Ackman...

Allergan (AGN).

Allergan (AGN) is a diversified global pharmaceutical company and a leader in a new industry model - Growth Pharma. The drug company (formerly Watson Pharmaceuticals) emerged from Watson's acquisition of Swiss generic drugmaker Actavis in October 2012. Actavis acquired Warner Chilcott in 2013, Forest Laboratories in July 2014 and Allergan in March 2015.

At the end of July, the company announced the sale of Allergan's generics unit to Teva Pharmaceuticals (TEVA) for $40.5 billion. This cash will allow Allergan to focus on its patented drug business while solidifying Teva's position in the market.

The previous month, Allergan has agreed to acquire Kythera (KYTH) for $75 per share, about $2.1 billion. Considering Kybella's operations in the U.S. but also in Europe, analysts think the pharma company has made a good deal.

For the second quarter, Allergan posted revenues of $5.76 billion compared to $2.67 billion for the same quarter a year ago. However, earnings per share have significantly decreased to -$0.8 from $0.28 a year earlier.

Despite all the good news, Bill Ackman's Pershing Square held 1,348,358 shares of Allergan; the value of the stake amounted to $401.30 million at the end of the first quarter of 2015. The famous value investor initiated the stake in Allergan with 597,431 shares during the first quarter of 2014. It is important to mention that the stock gained about 55.9% during 2014. But in the second quarter of 2015 the guru sold out all the shares of the company.

Allergan shares have increased 5.5% since the end of the second quarter while the Standard & Poor's 500 index rose 2%.

Meanwhile, Steven Cohen's Point72 Asset Management is still reportedly bearish.
Published on Aug 20, 2015
By Omar Venerio
Capital Markets, Derivatives and Financial Management Professor, Master in Finance and CFA candidate. I am an independent trader of stocks and options and passionate about the stock market.

Copyrighted 2020. Content published with author's permission.

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