LC

I'm not sure I agree with the link I am about to make, but I want to raise it as counterpoint for argument's sake: Many people argue that the increasing levels of securitization of mortgage loans was an underlying cause of the financial crisis. Back in the "good ole days", neighborhood banks made a mortgage loan and held it on their books. They were fundamentally aware of the risks they were assuming (because they knew, or at least knew of, the borrower) and were incentivized to properly manage this risk (because they held the loans). As we moved away from this as a society, every layer in the eventual process was removed from risk and accountability. Is the same thing happening here? I'm not sure. But I personally think there is some equilibrium in the economic process (for any product--mortgage loans to pharmaceuticals) where risk and reward are optimized for all parties. Obviously we overshot that process in the market for mortgage loans. I'm not sure where we are relative to that equilibrium point in pharma. But it seems we are moving away from managing risk and more towards maximizing reward.

I've also traded in and out, about 66% of my total position size which is rare for me but I felt I had a much stronger handle on this company vs others. Fiat is probably my most researched/read about position of the last 3 years which gave me the comfort to do so. I was a seller @ 16 and would like to be a buyer @ 12.xx

Would it be better to reach out to Oaktree IR vs. Alliance IR?

Ok, let’s say I think 90% of the price increase could be justified by the fact that drug was overlooked and was selling far below comparable products in the first place… The remaining 10% could be unnecessary and condemnable greed... Cheers, Gio Totally fair and I don't profess to know where that line is. I was just commenting on what happens when you take a purely economic justification to the extreme. Many times and in many industries do managers overlook human ethics to make another dollar. I want to avoid being a shareholder of those people. That's a general statement, I don't know where VRX falls in this discussion. For all I know they are a giant shade of gray selling both life-saving generics for pennies and a few rare drugs for millions.

So you like it when people die because they don`t have enough money? ;) I read LC as saying that companies should balance ethics and economics rather that he approved "charging almost anything for a drug..." I'll delete my interpretation if LC responds himself. :) That is exactly what I meant! I have a heart! Sometimes I think too much for this profession ;D

Imo you sell drugs for whatever the market is willing to pay. Exactly the way you sell everything else. Period. Cheers, Gio There's a balancing act between ethics and economics. You could justify charging almost anything for a drug which treats an ultra-rare life-threatening disease.

Assuming you have the standard finance & accounting knowledge and have read the oft-cited value texts (Graham, Buffett, Klarman, Marks, Greenblatt, etc.), I think your best bet may be to propose investment ideas and receive feedback and criticism. You will learn quickly by this process (and even more by actually putting money at stake). My most impressive learning experiences from COBF was having generally positive feedback on certain ideas proposed and then having those ideas flop. A cheap tuition for a valuable lesson.

Yes I was talking about cement kilns, but they exhibit the same characteristics of regional monopolies (which is what attracted me to them). I would suspect the aggregate miners are even lower margin than cement producers but without the added regulatory risk.

Miners I guess are different: I think it was Monarch Cement I was looking at where every quarter for a while they were just complaining about having to comply with tighter emission standards and having to upgrade their kilns. This was after being allowed to delay the upgrades for a few years. I agree with the NIMBY rationale you suggest, that seems to make sense to me. Also another exercise is to map out where the producers are in comparison to demand centers for cement (large cities etc.) to give an idea of relevance. One of the cement trade journals had a good map to use as a starting point with the major plants. Found it here: http://www.globalcement.com/images/stories/documents/articles/eGCMay2012-32-33.pdf

BG - true: competition is limited within the industry. the "competition" comes from the gov't imposing costly regulation every few years, usually to improve environmental effects. upgrading kilns can wipe out half a decade's profits in a year for some of the smaller players.

I am not following, can you help me understand? How can some NPV calculation create cash returns without showing up on OCF? Does Valeant have some long term contracts they are taking the NPV of on their management slide? If so, why not disclose that? And why create the impression it is a "cash return" when there has been no cash inflow? Edit: So, I just ran a quick calculation of 2009-to-date OCF + taxes + interest expense + restructuring expense. This "adjusted cash" figure (or whatever you want to call it) totals $11.45B, compared to $11.4B of "cash generated since deal close" from AZ Value's computed spreadsheet here: http://3.bp.blogspot.com/-8FPz1xTTuVA/Vd0CIM1PqHI/AAAAAAAAAPA/aRqd3ZaPqa8/s1600/2014%2BCash%2BPayback%2BTable%2B2.JPG This brings up AZ Value's point as to why management is adding back these costs to compute deal performance. Or maybe internally they don't, but why present it to investors this way? It's definitely misleading but each investor must make that decision themselves I suppose.

I'm having the opposite reaction. I was pretty bearish before the second installment and planned to sell my small position (1.4%). After reading the discussion on this thread, I feel much more comfortable. I wouldn't buy at the current price but I am comfortable holding. May I ask then, how do you feel about the apparent $4B "cash" discrepancy from management presentations vs. the audited statements?

I just read AZ Value's second installment. I have to say in my opinion it was compelling for two reasons: 1) The $85MM cash difference from Sanitis which was proven (in my mind) conclusively by cross-checking with Sanitis audited statements. I understand the amount is immaterial but the practice of deception is certainly not immaterial. 2) The $4B cash difference between total reported cash generated from acquisitions vs. cash from operations. Either way I see only one explaination: "Cash" is more like "adjusted cash" and management is being intentionally sneaky when reporting performance to investors. How can I, as an investor who depends on management for information, stand for this and invest alongside them? I see a good proof that management is misreporting $4B in cash and an almost certain proof that management has misreported cash in the past? Gio, you spoke of trust. How do you reconcile this?

Rye manhattans have been on the list the last week or so.

You're paying up for successful R&D. Valeant depends on its dealmaking to get this done. That's their entire business model. This is a company built through financing and M&A. Valeant is as much a financial company as a pharma company. So when claims are made that financial transparency is poor, it personally gives me pause. Opaqueness in the financial reporting is one of the first warnings signs of a finance company. In the case of Sprout, the FT article suggests the R&D wasn't even successful. Rather a Sprout-funded media campaign was the major factor leading to approval. Just something else which gives me pause. (I also found it odd that a women's equality campaign champions a drug which apparently reacts poorly with oral contraceptives, but that is a side issue)

holy crap, that "open letter" about how sukanto abused his own family is almost unbelievable. there's no way i want to be anything close to associated with that. screw that guy.

Seems here the risks/uncertainties are more tangible than a financial firm, which is why I think people jumped on board with less hesitation.

Brand doesn't real add value here. I looked at Sanderson but it seems fairly valued. I couldn't figure out how to make outsized returns here.

178B to 188B in terms of market cap. if +10B is turning the corner, i can't wait to see what's ahead.

Happy belated birthday, Sanjeev!

Happy Independence Day to my fellow Americans

Nice job Keith.

No better time than the present! (jk of course) ;D

I would like to see longer suspensions for criminal activity and large monetary fines for the cheating-type stuff.

i just hate these tenders where they specify a range, it's not worth it usually to pick the lower amount but nobody wants to get stuck with this stuff if the tender doesnt go thru at the higher amount.