Bill Ackman is parting company with the man who introduced him to his disastrous investment in Valeant Pharmaceuticals.
Bill Doyle is leaving Mr Ackman's hedge fund, Pershing Square, after less than two years, as the fund tries to claw its way back from losses on Valeant shares, according to its latest letter to investors.
Mr Doyle is a former Harvard classmate of Mr Ackman and introduced him to Michael Pearson, the chief executive who was building Valeant into a pharmaceuticals giant using an innovative business model combining debt-funded acquisitions and raising drug prices.
Mr Doyle and Mr Pearson had been colleagues at McKinsey, the consulting firm, and the pair helped persuade Mr Ackman to fund an audacious takeover bid by Valeant for Allergan. "Bill vouched for Mike," Mr Ackman said of Mr Doyle after that ultimately doomed bid was announced in 2014. "There was a lot of trust there."
In Pershing Square's letter to investors on Wednesday, Mr Ackman said that Mr Doyle would be leaving to concentrate on his role as executive chairman of a brain cancer company Novocure.
"The demands of overseeing Novocure and managing its relationship with its shareholders and other stakeholders have made it infeasible for Bill to continue as a member of the investment team," Mr Ackman wrote, although he added that he was not severing ties with Mr Doyle completely.
"In addition to Novocure, he will be working part-time at Table Management, an entity which oversees private investments for my family," Mr Ackman wrote.
Mr Doyle, who has also been an executive at Johnson & Johnson and a venture capital investor in healthcare, joined Pershing Square's investment team full-time in 2014, after a year as a consultant. His departure was announced at the end of a letter in which Mr Ackman put a bullish spin on Valeant's prospects.
The company's plunging share price contributed 16 percentage points of Pershing Square's 26 per cent loss in the first quarter of 2016. The fund rebounded somewhat last month to be down 18 per cent as at April 30.
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Since Mr Ackman and Steve Fraidin, another Pershing Square executive, joined Valeant's board in March, it has replaced Mr Pearson as chief executive with Joe Papa, and also filed its long-delayed annual report at the end of April. The report restated two quarters of revenue numbers related to a pharmacy chain controlled by the company, and disclosed several new investigations into its accounting practices. However, its publication came in time to prevent default on Valeant's $30bn of debt.
"As this was likely one of the most carefully audited financial statements ever, this should serve to comfort investors as to the integrity of the company's financial statements," Mr Ackman wrote in the letter.