giofranchi

Another good idea by Mr. Loeb? Cheers, Gio

Though I believe CSU deserves an higher multiple than the general market, I also agree with KCLarkin that valuation is the main risk here. Cheers, Gio

So Eric, Could you please summarize your current view about VRX? This thread has become so difficult to follow, and lots of people on this board, me included, hold your view in very high regard. Thank you very much for your time, Gio

Adam, I think you’ll do very fine. 1) To generate cash (as much as you can), 2) To save it (as much as you can), and 3) To invest it with great capital allocators: This is imo the name of the game. And don’t worry about the comparison to “the index”! To devote time and energy to 3) will yield good results and will enhance greatly your ability to do 1). Therefore, it will be worthwhile. At least, that’s my experience. If I could add something, I would pay attention also to the quality of the businesses (even a great capital allocator at the helm of a poor business will struggle, and I believe some of the companies in your list are not very high quality businesses), and to the price you are paying (for instance, I own MKL because I think it is very high quality, but I own a small position. Both BRK and FFH are cheaper today, therefore I don’t think you should give equal weight to all of them right now). My capital allocation strategy is dictated by the best compromise I can find between quality of management, quality of business, and price. I hope this might be useful. Cheers, Gio

Maybe… But Leonard’s integrity seems to me almost beyond doubt. His letters are among the best I have ever read, his compensation is probably unique, and the fact he has always used very little debt tells me he is very conservative in his dealings. This is what I always look for. And when I find it, I invest. Then, of course, you can never be 100% sure… And that’s why I never put all my eggs in just one basket! ;) Cheers, Gio

I agree. And the aerospace part of HEI-A’s business is mostly non-OEM, just like TDG’s. Cheers, Gio

I have sold some TDG today and used the proceeds + some new cash to open a position in HEI-A. Is HEI-A of lower quality than TDG? Maybe. Is its price more attractive? I think so. Is its debt load lighter? For sure. Overall, I think a good way to diversify. Cheers, Gio

+1 Cheers, Gio

That is what has happened during the last two quarters… I don’t think it is indicative of the organic growth we might expect in the future… Historically they have achieved an higher rate of organic growth. We will see! Cheers, Gio

Gary, VRX has been accused of fraud… That imo has nothing to do with the ability of growing both organically and through acquisitions. If you are able to grow both ways, what shouldn’t be liked about it? That’s the best business model as far as I am concerned because: 1) Usually it is tough to grow only organically at the same rate of those who are good at growing both organically and through acquisitions; 2) The ability to grow both ways puts less pressure on the business: if you strive too much in either strategy, you might end up making unnecessary mistakes… Instead, the right mix of organic growth and growth through acquisitions leaves the manager free to pursue both without the need to push too much in either strategy, because they complement each other; 3) Finally, when organic growth happens to falter a bit, growth through acquisitions might come to the rescue, and vice versa. In other words, though results in business are always lumpy, the right mix of organic growth and growth through acquisitions might mitigate those inevitable fluctuations. This is CSU business model, and it is also VRX’s. If you ask me, the shorts have shown nothing against VRX’s business model. What they have is an accusation of fraud. My best guess is: if the accusation of fraud is proven unfounded, in a few months the media will get bored about VRX, we will get back to business as usual, and VRX’s stock price will swiftly recover. Of course, don’t ask me about the accusation of fraud, because my ideas are as confused as everyone else’s… If VRX’s business model has something that I was never very comfortable with, it is its very high debt load… But CSU has no such load, therefore the comparison is pointless. Cheers, Gio

I hope you are right. Until then FFH has a place in my portfolio as "ready cash" or "something that zigs while others zag". Cheers, Gio

Yes! Very clear! Thank you. Gio

So, you are getting quite bearish. Reading your previous posts, I was under the impression you thought there was no fraud at VRX. Maybe I interpreted them the wrong way… And if it is so, simply forget my question! Instead, if my impression was right, what made you change your mind? Q3 results and the trend gross to net you don’t like? Thank you! Gio

That would be great! I sincerely hope you are right! Cheers, Gio

That makes sense. Thank you! A clear analysis imo is the following: http://seekingalpha.com/article/3625216-pbms-boot-philidor-how-will-it-affect-valeant?app=1&auth_param=7i5hb:1b36mr0:f2457636f44ddd64e971c4631c4907e9&uprof=25# Cheers, Gio

Eric, I hope you are right. One thing I am sure of: there must be organic growth. When you buy lots of businesses with debt, overall they must become more valuable over time. And organic growth is what tells you if they are increasing in value or shrinking. I don’t need to see double digits organic growth. A 2-3 percentage points above the general economy would be fine. I still think Pearson is a very good value manager, has articulated a business strategy that makes a lot of sense, and has executed brilliantly until now… But, if organic growth was achieved in ways that are not repeatable going forward, and we don’t see organic growth at least in the middle single digit (4%-5%), I would have to admit I am wrong. Cheers, Gio

Why such a poor opinion of Ackman? With this I agree 100%. Cheers, Gio

Been gone from this thread for two weeks and a couple hundred pages, but the question in my view is not how much the legal liability might be for Philidor (and anyway, it's likely that if this stuff rises to the level of a criminal charge whatever veil VRX thinks it has will be pierced), the question is how much VRX can grow without Philidor. B+L/Salix/Consumer are good assets. The rest of the business is iffy and might reset to a much lower base without Philidor. For example, last Q Jublia was 40% of total US organic sales growth and 50% of sales went through Philidor. What is the true demand for Jublia without Philidor jamming the insurers? I don't know. It also looks for all the world like VRX stuffed the channel with Salix to make their 3Q numbers (check their $300M salix sales estimate on the 2Q call v actual salix sales of $450M in 3Q combined with Xifaxan scripts growing at only 15% sequentially and then go read the gross:net disclosure in the 10Q MD&A--as an aside it's hard for me not to see how exploding gross:nets are not indicative of a broader issue in the business, but that's not the real point here). At any rate, the risk runs much deeper than the size of the fine in my view. Thanks for posting. For what it is worth, I think it is a good idea to review Bagehot's posts about VRX, if you have or want to make an investment in VRX. I believe Bagehot has made some of the highest quality posts since I have followed the thread. It is unfortunate that his/her post has been buried because of all of the breaking news and subsequent chatter. Good luck to all. I agree. So, basically he is saying that without Philidor VRX’s organic growth will take a hit. And that they will probably show no organic growth in the quarters ahead. Have I understood correctly? If it is so, well then it looks to me very much like the thesis of those people who think VRX is a fraud. Cheers, Gio

Valeant To Terminate Relationship With Philidor http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-To-Terminate-Relationship-With-Philidor/default.aspx Cheers, Gio

I have only said imo he should be more careful to accuse people of lying. That’s all I have said. But I guess we always can count on you to distort anything I say… ::) Gio

Cleveland Clinic announces top 10 list of breakthrough technologies for 2016 http://medcitynews.com/2015/10/cleveland-clinic-announces-top-10-list-of-breakthrough-technologies-for-2016/ Cheers, Gio

That's exactly what I have been saying! ;) Cheers, Gio

That's exactly what I have said, isn't it? And that's exactly what they are buying, as long as there is organic growth. The value of a ship doesn't go up, right? Cheers, Gio

To get satisfactory organic growth, they spend for R&D (not much, but very focused on ROI), they spend for marketing, they spend for their sales force, etc. … just because those costs are not defined as maintenance expenditures, it doesn’t mean they are less effective. And they are already accounted for! Cheers, Gio

+1! Very interesting article! Cheers, Gio