UPDATE 1-Big bets on Valeant hit some hedge funds hard in October

(Adds Fir Tree Partners' assets under management in paragraph
9)
By Svea Herbst-Bayliss
BOSTON, Nov 6 (Reuters) - Concentrated bets on Valeant
Pharmaceuticals VRX.N VRX.TO left some hedge funds nursing
heavy losses last month when the industry darling's stock price
tumbled nearly 50 percent.
Nehal Chopra's Tiger Ratan, which had more than 20 percent
of its assets in Valeant at the end of the second quarter, lost
9 percent in October, according to two people familiar with the
fund's performance.
The loss is one of the biggest the hedge fund industry has
seen yet for the month and pushes the popular manager's
portfolio further into the red. A spokesman was not immediately
available to comment.
Hound Partners, which had a 15 percent position in Valeant
at the end of the second quarter, dropped 7.1 percent in
October, leaving the roughly $4.5 billion fund flat for the year
to date, the two sources said. The firm was not immediately
available for comment.
The losses are larger than a previously reported decline of
6 percent to 7 percent at William Ackman's Pershing Square
Capital Management, which owns 21.4 million Valeant shares and
ranks as the second-biggest owner. Pershing Square is down 19
percent for the first 10 months of the year.
Valeant's stock price dropped 47 percent in October after
short-seller Citron Research accused it of improperly inflating
its revenue. Valeant Chief Executive Officer Michael Pearson (L:PSON) has
denied the allegations, and Ackman has publicly supported him
since then.
Valeant's plunge also pressured other pharmaceutical and
healthcare companies, which hurt investors like Larry Robbins'
Glenview Capital. Glenview lost 2.3 percent last month, leaving
the fund down 14.8 percent for the year.
October was not bad for all hedge funds with Valeant bets,
however. Several managed to post gains, possibly by exiting or
trimming the stock, or as other holdings in their portfolios
rose, investors said.
Fir Tree Partners, a $13 billion hedge fund that had about 4
percent of its assets tied up in Valeant at the end of the
second quarter, gained 2.2 percent in October as its bets on
Interpublic Group of Cos Inc IPG.N and Avis Budget Group Inc
CAR.O fared well.
Similarly Brenner West, a $1.7 billion hedge fund that
listed Valeant as its second-largest position at the end of
June, gained 2.7 percent last month.
Jana Partners, which had Valeant as a top 20 position at the
end of the second quarter, divested the stock and told investors
its flagship fund gained 2.7 percent, shrinking its year-to-date
loss to 4.1 percent.
"We started getting rid of our position in Valeant after
(Democratic presidential candidate Hillary Clinton) tweeted:
'Price gouging like this in the specialty drug market is
outrageous,'" said a manager at another hedge, requesting
anonymity.
Several other managers also said they acted before
short-seller Citron published its Oct. 21 accusations.
Viking Global Investors, which owned roughly 1 million
Valeant shares at the end of June, gained 1.3 percent last month
and is up 5 percent for the year, a source said.
Hedge funds without exposure to Valeant typically rose, as
the Standard & Poor's 500 index gained more than 8 percent,
reversing August and September losses triggered by worries about
slower growth in China.
The average hedge fund gained 1.71 percent last month and is
flat on the year, data from Hedge Fund Research shows.
Eric Mindich's Eton Park climbed 4.5 percent and is up 9.2
percent, while Tiger Global, gained 8 percent for a 2 percent
gain year to date.
Sahm Adrangi's Kerrisdale Capital climbed 10 percent last
month and is up 15 percent for the year. It has publicized
several short positions, including one against spectrum holding
company Straight Path Communications Inc STRP.A .