Activist hedge fund Glenview Capital filed a 13D on Bausch Health (BHC) after market hours Monday. The $13.3B fund, managed by Larry Robbins, disclosed a 5.9% stake in the pharmaceutical company. Bausch Health is now Glenview’s #3 portfolio position.
BHC shares closed at $18.79 on Tuesday, up 4.39%.
BHC is a global healthcare company that develops and manufactures a variety of pharmaceutical products, ranging from eye-care and gastroenterology products, to medical devices, over-the-counter products, and dentistry products.
Bausch Health, formerly known as Valeant Pharmaceutical, has had a volatile history.
In August of 2015, when it traded over $250 per share, Valeant was a “hedge fund hotel” – a popular holding of hedge fund managers. Bill Ackman’s Pershing Square, Jeffrey Ubben’s ValueAct and John Paulson’s Paulson and Company were among the top holders. But things went south in a hurry when in October of that year activist short seller Andrew Left alleged that Valeant was using a bogus company-owned network of specialty mail-order pharmacies to inflate sales of its high-priced drugs and to keep patients and their insurance companies from switching to less costly generics. The report called Valeant the “pharmaceutical Enron.”
The stock hit rock bottom at $8.36 in April of 2017. According to Bloomberg, Ackman’s firm ended up losing more than $4 billion on Valeant.
Back in 2015, as Valeant Pharmaceutical, Bausch Health was a Hedge Fund Hotel, teeming with hedge fund investors. Then the stock cratered.
Valeant changed its name to Bausch Health Companies Inc. in July of 2018, aiming to put its scandalous past behind it. The Bausch name refers to one of the company’s key businesses, Bausch & Lomb, famous for contact lens products. On January 18 of 2019, CEO Papa told Bloomberg that BHC was the “turnaround opportunity of a lifetime.”
But the turnaround is taking a while. Since CEO Papa made that comment, the stock is down about 18%. BHC hit a high of $31.97 on Dec. 12 of last year, as investors began to appreciate the company’s potential. Bausch’s debt position was declining, and the company has an extensive product portfolio and global pipeline.
Then the Coronavirus pandemic hit. BHC shares collapsed to a low of $11.15 on March 18. The stock has since rallied back to the $20 level.
Then on Monday Glenview Capital filed a 13D on Bausch, saying in the filing.
The Reporting Persons and/or affiliates of the Reporting Persons intend to consider, explore and/or develop plans and/or make proposals (whether preliminary or final) with respect to, among other things, the Issuer’s businesses, assets, operations, and strategy, including plans or proposals in which the Reporting Persons and their affiliates may participate. The Reporting Persons and their affiliates intend to communicate with the Issuer’s management and board of directors, other shareholders or third parties, service providers and financing sources regarding the Issuer in an effort to explore ways to strengthen the Issuer and enhance shareholder value.
The healthcare-focused hedge fund first took a 1% portfolio position in BHC back in Q4 of 2018. The fund breached the 5% ownership level in April, filing a 13G. Glenview Capital filed a 13D on Bausch on July 27.
Glenview founder Larry Robbins describes his activist style as “suggestivist.”
Glenview’s founder Larry Robbins describes his activist style as “suggestivist.” Robbins notoriety grew in 2013 when he went activist on hospital operator Health Management. HMA had been struggling financially, and Glenview began a campaign to “revitalize HMA.” Ultimately, HMA installed a new board of directors per his suggestion, removed several top Health Management officials and agreed to a merger with Community Health Systems (CYH).
From Glenview’s ADV filed with the SEC.
Consistent with our ownership philosophy, Glenview frequently and regularly shares its perspectives on long term value creation initiatives with the management teams of portfolio companies, and occasionally, with their Board of Directors directly. Such communications, which we refer to as “Suggestivism”, generally center around issues of long-term capital acquisition, long-term capital allocation, optimal corporate form, financial statement presentation and opportunities to improve competitive or strategic positioning. Glenview believes such dialogues are optimal in a respectful, patient and private forum.
Glenview is not the only big-name hedge fund with a position in Bausch Health. Two of the stock’s big holders from the Valeant days continue to see value in the shares. BHC is Paulson & Company’s top holding. Paulson filed a 13D/A on the company in May, disclosing a 7.28% stake. And Jeff Ubben’s ValueAct Holdings held a 5.05% position as of Q1’s end.
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