Provencio, who wasn’t accused of wrongdoing at Signalife, didn’t respond to a request for comment. A spokesman for Valeant declined to comment, while pointing to a previous company statement that described Provencio as having an “accomplished professional background and qualifications.”
Ackman E-mail
On Oct. 15, Hempton sent Ackman a taunting e-mail, saying he wanted to say just one word: Philidor. Days later, short-seller Andrew Left issued a report on ties between Valeant and Philidor RX Services LLC, a controversial mail-order pharmacy that was helping to boost sales, questioning whether Valeant was the “pharmaceutical Enron.” The shares plunged as much as 40 percent that day. Hempton says they’re going to zero. The stock dropped 0.7 percent on Monday.
Ackman disagrees. His firm increased its stake in the drugmaker after the news of Philidor and he became a director in March, meaning Pershing Square now has two board seats. While a lack of early disclosure on the relationship between the company and Philidor created uncertainty, specialty pharmacies are an increasingly important distribution channel for the industry, Pershing said in October.
“Part of the fun of short selling is that there are puzzles after puzzles after puzzles,” says Hempton. Valeant’s huge market value meant “the David and Goliath aspect of it was kind of fun.”
Herbalife History
The conflict between the two men goes back to Herbalife, the nutrition company Ackman says is a pyramid scheme preying on people with low incomes and Hempton views as highly ethical. Hempton, who says he’s owned the shares since Christmas Eve, 2012 -- shortly after Ackman announced a $1 billion short -- says Bronte visited the firm’s distributors in countries from China to Israel to research whether the company was the real deal. He says he spends two months a year on the road testing assumptions. Herbalife has more than doubled since Hempton bought the stock. It slipped 0.1 percent on Monday.
The U.S. Federal Trade Commission has been investigating Herbalife’s marketing practices since 2014. In May, Herbalife’s shares surged after the company said it was in late-stage talks to resolve the probe, and expected to pay about $200 million. Ackman has been stepping up criticism of the company through a series of videos published on Pershing Square’s Facts About Herbalife website. Herbalife has aggressively denied his allegations.
Moral Purpose
Short-selling has a moral purpose, according to Hempton, but he doesn’t care that much for it. His real mission is to make money for investors, and he does that mostly through finding things to buy. Bronte’s stock-picking method, which Hempton says comes from his days at Platinum, is to: