Billionaire hedge fund manager Bill Ackman has sold his position in Valeant Pharmaceuticals, sources told CNBC.

The stock fell as much as 10 percent in premarket trading, as more than 4.2 million shares changed hands.

Sources said Ackman sold his 27.2 million shares at around $11 each. Ackman's Pershing Square Capital Management purchased Valeant at an average cost of $196 a share in 2015, according to the hedge fund's 2016 letter.

Pershing Square said in a statement that Ackman would remain on the board, but would not stand for re-election.

The firm said, "At its current market value, the Valeant position represented 1.5% to 3% of the various Pershing Square funds; however, the investment required a disproportionately large amount of time and resources."

Ackman told CNBC that he sold his stake because it wouldn't "move the needle for Pershing Square, even if the stock doubled from here." Valeant shares ended Monday's session around $12.11, a fraction of their all-time high of $263.81, a record set in August 2015.

While Ackman believed in the company, the hedge fund manager told CNBC that he underestimated the damage and didn't realize how bad the situation was until he joined the board. He said that he probably should have sold his position earlier.

Pershing Square said Valeant CEO Joe Papa and his team "have done an excellent job refocusing and setting a new course for the company" and wished the company well.

Ackman previously told CNBC that the cratering of Valeant's stock price led to the "worst period of performance" in his investment career.

Last year, Ackman said he "of course" regrets his initial investment in the embattled pharmaceutical company. He said he thought seriously about selling his stake, but decided he could "fix it."

The Canadian drugmaker first came under fire for allegations of using a network of specialty pharmacies to sustain sales of their high-priced drugs and prevent patients and insurers from switching to cheaper generic drugs. Short-selling firm Citron Research subsequently published a note calling Valeant the "pharmaceutical Enron."

In response, Valeant formed an ad hoc committee to review the allegations regarding specialty pharmacy Philidor RX Services.

In November, the U.S. attorney's office in the Southern District of New York announced charges for a former Valeant executive and a former CEO of Philidor.

"Their alleged kickback scheme illegally converted Valeant shareholder money into their own personal nest eggs. As alleged, while purporting to be arms-length business counterparts, the two men were, in fact, partners in crime," said Preet Bharara, then U.S. attorney for the district.

— Reporting by CNBC's David Faber and Scott Wapner.