Even after Ackman’s departure -- the hedge fund manager called his investment a “ huge mistake” -- Paulson won’t be the only big investor on the board. Robert Hale, a partner with hedge fund ValueAct, has been a director since August 2015. ValueAct boosted its stake to more than 5 percent recently, and remains among the biggest holders after first investing in mid-2006 in what was then a small experimental-drug developer.
David Maris, an analyst at Wells Fargo and a longtime critic of Valeant, viewed the new appointment with skepticism.
“It could be a sign that a major holder is frustrated with the pace and direction of change,” Maris, who rates the shares underperform, said in a note to investors. “We do not know what new domain experience that Paulson brings to Valeant’s board that was not already present, especially with ValueAct already on the board.”
Paulson is joining Valeant while winding down his role as a director at American International Group Inc. Paulson was elected last year to the insurer’s board after proposing that then-Chief Executive Officer Peter Hancock split the company into three separate businesses. Paulson’s fund sold AIG shares while he was on the board, and AIG has since replaced Hancock with Brian Duperreault. AIG said in April that Paulson wouldn’t stand for reelection “due to his other time commitments.”
AIG shares have underperformed the S&P 500 Index since Feb. 11, 2016, the day the insurer announced that Paulson and an ally of fellow activist Carl Icahn would join its board. They’ve gained 26 percent through Friday’s close, while the S&P 500 rose 33 percent.
Paulson’s firm has about about $10 billion in assets, just $2 billion of which is outside capital, according to its most recent regulatory filing. Most of the remaining $8 billion is Paulson’s own fortune. Paulson founded it in 1994. At its peak in 2011, the firm oversaw $38 billion.
“With his significant business and financial expertise, John will be a strong addition to the board,” Valeant CEO Papa said in the statement Monday. “His experience will be especially valuable as we continue to execute on our transformational strategy to turnaround Valeant.”
This article was provided by Bloomberg News.