UPDATE 1-Hedge fund mogul Ackman hit hard by huge Valeant bet

(Adds details throughout on the bet)
By Svea Herbst-Bayliss
BOSTON, Oct 21 (Reuters) - Hedge fund mogul William Ackman
has become one of the biggest casualties of a meltdown in
pharmaceutical firm Valeant VRX.N VRX.TO , with losses on the
position amounting to roughly $1.8 billion so far this year,
including more than $800 million at one point on Wednesday.
Valeant shares plunged as much as 40 percent after an
influential short-seller accused the company of fraud, saying it
used its relationship with specialty pharmacies to inflate
revenue.
With the stock's dramatic swings, Ackman's portfolio lost as
much as $820 million during the day but the loss lessened to
roughly $650 million as the price inched up again in
mid-afternoon. Cable television station CNBC reported that
Ackman bought an additional 2 million shares of Valeant on
Wednesday.
The hit is likely to cement Ackman's Pershing Square Capital
Management's place as squarely in the red this year, a twist of
fate for a fund that in 2014 yielded 40 percent returns and
bested a field of high-profile rivals.
"It takes a lot to turn (Ackman's) stomach, but today might
be the day," said an investor in the fund, who asked not to be
named.
Pershing Square was down nearly 13 percent for the year by
the end of September, according to investors, after market
turmoil caused by concerns over China's economy, slumping
commodities prices and a potential Fed interest rate hike struck
several of its holdings.
A spokesman for Ackman declined to comment.
Citron Research, which published its report on Wednesday,
said Valeant failed to disclose ties to specialty pharmacies
which helped create "phantom sales" of its products.

Valeant said it does not record drugs stocked at such
pharmacies in its consolidated financial reports.
Ackman said in March his fund had acquired a 5.7 percent
stake in Valeant, making Pershing Square the company's
third-largest shareholder. The stake, 19.5 million shares, cost
Ackman about $3.3 billion at the time, according to the
investor.
That position was a huge winner in the first half of 2015,
but started to falter in recent weeks, and was pummeled after
the Citron report.
Valeant is down 20.15 percent this year.
Ackman's position is now about $1.8 billion in the red since
it was acquired, according to the investor.
Less than three years ago, it was Ackman who accused a
company of fraud, placing a $1 billion short bet against
nutrition and supplements company Herbalife (N:HLF) HLF.N and saying
it runs a pyramid scheme, something Herbalife denies.
Herbalife is up about 48 percent this year to around $55.60
a share, further hurting Ackman's portfolio.
Ackman scored a 40 percent gain in 2014 thanks to a huge win
on Botox maker Allergan (N:AGN_pa).