Hedge fund manager Bill Ackman first bought a $3.3 billion stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) back in 2015 when the stock was trading north of $200 per share. He added to his position over the months, played a role in ousting its CEO and was given a seat on the board.

On March 13, 2017, Ackman cut his losses and sold every last share when the stock was trading around $12 per share for a total loss of around $4 billion.

Lessons Learned

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Ackman is now sorry for his losses. According to a Bloomberg report, the hedge fund manager told investors in a letter that he is "deeply and profoundly" sorry for the $4 billion of losses. He also acknowledged that it was a "huge mistake" to invest in the pharmaceutical company.

Ackman suggested that Valeant's downfall was due in part to its costly acquisition of Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP)) for $11.1 billion in 2015. Nevertheless, Ackman owned up to the decision to invest in Valeant and suggested he misjudged Valeant's management and aggressive M&A strategy to fuel growth.

Ackman added in his letter that he learned from the very costly mistake, including the fact that even a superb management team is "capable of making significant mistakes."

"The highly acquisitive nature of Valeant's business required flawless capital allocation and operational execution, and therefore, a larger than normal degree of reliance on management," Bloomberg quoted Ackman as saying in his letter. "In retrospect, we misjudged the prior management team and this contributed to our loss."

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