(New throughout, adds data from filing)
By Svea Herbst-Bayliss and Tim McLaughlin
BOSTON May 2 William Ackman's Pershing Square
Capital Management is already sitting on a $1.2 billion gain
above his trading costs on his bet on Botox-maker Allergan Inc
, according to a filing made on Friday.
Allergan shares are now trading about 34 percent above
Pershing Square's average trading costs per share, according to
U.S. regulatory filings.
Ackman, one of the hedge fund industry's most widely watched
investors, has acquired 28.9 million shares of Allergan, mostly
through call option exercises and forward purchase contracts.
The gain cements a dramatic comeback for Ackman and his
$13.6 billion fund after a bruising 2013 where losses on J.C.
Penney and Herbalife weighed on returns.
Late last month, Ackman disclosed that the trade amount on
most of that stock was $3.2 billion, or $126.54 per share. That
reflects more than $1 billion gain on Allergan shares, which
traded at $169.45 on Friday.
Ackman is working with Valeant Pharmaceuticals International
Inc to buy the Botox maker. Two weeks ago, Pershing
Square first said it held a nearly 10 percent stake.
On Thursday, the Federal Trade Commission gave Pershing
Square clearance to finalize the transactions. The
Hart-Scott-Rodino Act requires that investors notify the FTC and
the Justice Department's antitrust division before making
acquisitions of voting securities. Usually there is a 30-day
waiting period before the transactions can be finalized. In this
case the hedge fund received permission to proceed within two
weeks of making its original filing on April 21.
Allergan reacted to Valeant's unwanted $47 billion takeover
bid by adopting a so-called poison pill that essentially
prevents Pershing Square from acquiring more than the 9.7
percent stake it already has. If the fund were to cross the 10
percent threshold, other investors would be allowed to buy
By announcing that Pershing Square was working with Valeant
as a group, the activist fund essentially jump-started the
process of waiting for a catalyst to push the stock price
higher, making it a model that other hedge fund managers said
might be tried again.
Other hedge funds, including Citadel, Viking Global
Investors and Highfields Capital, have also been recent buyers
of Allergan stock, according to ThomsonReuters data.
The gain was reflected in Pershing Square's strong
performance returns when the fund told investors that its
flagship fund was up roughly 19 percent this year.
(Reporting by Svea Herbst-Bayliss and Tim McLaughlin; Editing
by Lisa Von Ahn, Steve Orlofsky and David Gregorio)