ACKMAN: 'Be fearful when others are fearful'

Hedge fund titan Bill Ackman just turned a Warren Buffett investing maxim on its head.

"Be fearful when others are fearful," Ackman said on Wednesday at the Berkshire Hathaway 50th Anniversary Symposium at the Museum of American Finance in New York.

The famous Buffett investing maxim of course is: "Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors."

Ackman, the founder of Pershing Square Capital, has lost more than $2 billion on paper on his massive investment in Valeant Pharmaceuticals.

The Canadian drug company's stock has fallen more than 40% since Citron Research, a short-selling firm led by Andrew Left, issued a report in October asking if the company was running an Enron-like fraud. Before that, the stock had been under pressure after the company was scrutinized for raising the prices for two acquired drugs.

The Citron report, though, focused on Valeant's relationship with Philidor, a specialty pharmacy. Citron has accused Valeant of using Philidor to book "phantom sales."

Valeant has denied the allegations in the Citron report. The company has also said it will sever all ties with Philidor.

The day the Citron report came out, Ackman bought 2 million more shares at an average purchase price of $108, bringing his stake to more than 21.47 million shares.

On an investor call, Ackman said this a "very damaging moment" for the company. He also said that he expects that the company will have to deal with negative press reports and scrutiny from regulators and politicians in the next several months.

Ackman also said that he thinks the stock is "tremendously undervalued" and that the business remains "quite robust." He estimated that the stock could be worth $448 a share in three years. The stock was last trading around $83.02 per share on Wednesday.

During his call, Ackman also drew a comparison to Buffett. He recounted how Buffett bought American Express' stock after it got caught up in the "Great Salad Oil Scandal of 1963." That investment made Buffett a fortune.

Of course, Ackman's experience is different, but his thought process seems to be that Valeant's stock can recover.