William Ackman woke up in a Toronto hotel room well before dawn on Tuesday last week in a state of distress. One of his hedge fund’s biggest bets was going badly awry. He had already lost almost $2 billion on Valeant Pharmaceuticals International, and the controversy pummeling the drug maker’s stock wasn’t abating.

The billionaire investor climbed out of bed, grabbed his iPhone and began tapping out an email to Valeant chief executive Michael Pearson and some of the company's directors.