What: Valeant Pharmaceuticals (NYSE:BHC) ended up almost 19% today after board member Bill Ackman, who is also CEO of Pershing Square Capital Management, a large Valeant shareholder, said that the company might have a new CEO in a matter of weeks.
The drugmaker is actually on a nice two-day 30% run after announcing yesterday that the board completed the review of its accounting practices and hadn't found any additional issues.
So what: Increasing in value because the company says there won't be any more surprises makes a lot of sense.
Increasing by so much because the company might get a new CEO soon? Not so much.
An extended period without a new CEO certainly wouldn't be ideal, but it's not like the company isn't without leadership. Ackman and the rest of the board appears to be very active, and outgoing CEO J. Michael Pearson is still around until the new CEO takes office.
Ackman also noted that Valeant Pharmaceuticals plans to submit its 10-K annual report by the end of April, which would eliminate the overhanging issue of the company defaulting on its debt. But that's been Valeant Pharmaceuticals' plan since it decided to delay the 10-K filing to deal with the accounting issues.
After the year the drugmaker has had, it appears investors are latching on to anything positive. Ackman said he sees a lot of upside from here, so the higher price may just be a sign that the price was too low before rather than being a result of the news.
Now what: The announcement of a new CEO and -- more importantly -- his or her plan to lead Valeant Pharmaceuticals out of this mess will be a more significant event in the company's future.