Biotech and Pharma

Bill Ackman: 'We made one very big mistake' with Valeant and lost big time

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Billionaire hedge fund boss Bill Ackman told CNBC on Friday the past 12 months were the "worst period of performance" of his investment career, and the implosion of Valeant Pharmaceuticals was mostly to blame.

"It's almost entirely been driven by Valeant. I've never owned a stock down 90 percent," the Pershing Square Capital Management chief told "Squawk Box," referring to Valeant's plunge from a 52-week high of $245 per share to around $18 per share in late June.

Since then Valeant has recovered to around $31 per share, as the embattled drugmaker works to regain investor confidence after questions about its pricing strategy and ties to a specialty pharmacy led to wider political and regulatory scrutiny, and hammered the stock.

Ackman, who joined the Valeant board in mid-March, said the company is making progress. In addition to revamping its board, Valeant earlier this year hired Joseph Papa, chief executive of over-the-counter drug company Perrigo, as its new CEO to succeed longtime chief Michael Pearson. Valeant in August named Paul Herendeen, an executive at animal drugmaker Zoetis, as its chief financial officer.

"[Valeant] is now a more traditional Pershing Square investment" now that it's been pummeled, he said. "We normally invest when shareholders have lost confidence in management. And that's what happened here. It was not just management, shareholders lost confidence in the numbers. The financial statements were delayed. There was a potential default."

Ackman said he broke all his investment rules with Valeant, initially striking up a partnership with the Canadian drugmaker in 2014 to try to buy Botox-maker Allergan. The unique arrangement raised questions at the time about a conflict of interest, an assertion Ackman had dismissed.

"We went off the reservation," he told CNBC on Friday, looking back at those early days. "We made one very big mistake taking a passive position in Valeant."

"We never normally get to meet the management of a company before making an investment. [And] we never invest in really complicated companies you can't figure out from just reading the 10K [filing]," he said.

Actavis ultimately thwarted Valeant, and purchased Allergan last year in a deal valued at $66 billion.

Once the Allergan deal was lost, Ackman stuck with Valeant in hopes to strike other deals. "We thought we could help, as we attempted to do in the Allergan transaction, by creating other potential merger opportunities. That was a big mistake."

Ackman's Valeant comments Friday on "Squawk Box" were part of a wide-ranging interview that also dealt with the billionaire's Herbalife short. The Pershing Square founder said he was approached to purchase Carl Icahn's stake in the nutritional supplement firm.