giofranchi

+1 Cheers, Gio

Schwab, The question we must answer imo is the following: are VRX “finite-lived intangible assets” taken as a whole decreasing in value, or are they increasing in value? If they are decreasing, I agree with you. If they are increasing, I don’t see what’s wrong with their adjustments to get Cash EPS. And, as I have said, given their organic growth due to volume only, assuming they won’t be able to raise prices anymore, it is hard to argue their “finite-lived intangible assets” are not increasing in value. Anyway, like many have said, VRX’s low stock price and high debt might prevent it from doing large deals for some time… We already see GAAP Operating Cash Flow of $737 million during the last quarter that is closing the gap with Adjusted Operating Cash Flow ($865 million). During the next year, if there won’t be any major acquisition, we will probably see also GAAP Net Earnings per Share closing the gap with Cash EPS. We had already seen that trend during the Allergan saga, and we should see it again now. Cheers, Gio

I am buying more at the opening today. I don’t have yet the same number of shares I had before I sold half, but I am getting close. I am still leaving some room to average down, because I think there is more downside for the stock here: if public sentiment continues to deteriorate, also the SEC might decide to look into VRX… That of course would be another meaningful leg down for the stock, and I would buy more. Now that VRX discloses organic growth due to volume alone, and given the fact it is well above 5%, I am even more comfortable with their adjustments to GAAP Net Earnings to arrive at Cash EPS. Selling at 12.5x 2015 Cash EPS, VRX is trading like a shrinking business… certainly not like a business which has just experienced its most profitable quarter to date (based on its GAAP Operating Cash Flow of $737 million). Of course, the above is true if you trust their numbers… I am far from a good analyst and I cannot prove their numbers are not inflated, like many analysts have suggested. I have followed Pearson closely for some years now, tried to read everything he had to say, and I have always found him a very rational manager, who has articulated and successfully implemented a very rational business strategy, and who has put himself at the same level of any other minority shareholder. In other words, a good track record, a good strategy, and a good behavior. That’s basically all I am looking for, and when I find it, I trust what management is saying. 44 people on this board believe instead that VRX is a fraud: I am well aware that, if they are right, I am throwing good money after bad… We will see! Cheers, Gio

I agree. And I would add that generally I am pleased seeing organic growth 2-3 percentage points above the rate of growth for the general economy... I suspect we are going to see organic growth at VRX much higher than that! This being said, the market clearly disagrees right now... We will see. Cheers, Gio

Drug Makers Sidestep Barriers on Pricing http://www.nytimes.com/2015/10/20/business/drug-makers-sidestep-barriers-on-pricing.html?ref=health&_r=1 Cheers, Gio

So now VRX doesn’t only disclose organic growth on a quarterly basis, but it has also started disclosing how that organic growth is achieved: 8.2% volume + 4.4% price = 13% organic growth. Even if you think price increases are completely unsustainable, we still get a very healthy 8% organic growth. No meaningful divestiture to take into consideration, therefore I guess organic growth due to volume alone is quite reliable. But let’s say VRX has the habit of presenting too rosy a scenario, and that organic growth is around 6% instead. A 6% organic growth imo means that their overall “finite-lived intangible assets” are worth more than before, not less. They have declared $912 million in total adjustments, of which $683 million (75% of total adjustments) were amortization of intangible assets. Could someone explain why cash eps are not a good metric to value a pharma company which is able to grow organically? Thank you, Gio

Well, I guess when public sentiment goes so much against a certain kind of business, it could really change it from a good business some months ago into a bad business today… Probably, they didn’t expect it, but it has occurred… What’s wrong in changing your mind?! ??? Cheers, Gio

CEO of the Year 2015: Mike Pearson, Valeant http://www.canadianbusiness.com/leadership/ceo-of-the-year/top-ceo-mike-pearson-valeant/ Cheers, Gio

To Reduce the Cost of Drugs, Look to Europe http://www.nytimes.com/2015/10/20/upshot/to-reduce-the-cost-of-drugs-look-to-europe.html?partner=socialflow&smid=tw-nytimesbusiness&smtyp=cur Cheers, Gio

iPhone killer: The secret history of the Apple Watch http://www.wired.com/2015/04/the-apple-watch/?mbid=social_twitter Cheers, Gio

Yes, a bit dated, but I think it might still be relevant: imo the dynamics with competitors and the opportunities in China (and today probably in India too) have not changed much. Cheers, Gio

Well, personally I think they have lots of room to grow in an industry that I like a lot. As they have already done with their newly acquired cold chain business, they might be able to look beyond their traditional business of medical instruments and biological indicators. Its management is proven and still young enough to go on doing what they know pretty well for a long time. I think MLAB definitely is what I am always looking for: a great capital allocator at the helm of a great business. Consequently, I think we will see both organic and inorganic growth for many years to come. Price is my greatest concern: I think I’ll do what I usually do, when I like a business very much, but I think it is pricey: I am making an initial investment, leaving lots of room to average down. If its multiple contracts, I’ll buy more. If it doesn’t, I’ll still be able to participate in the growth of the company. Cheers, Gio

Jim Clark: The Comeback Billionaire Who Bet On Apple http://www.forbes.com/sites/ryanmac/2012/03/08/jim-clark-the-comeback-billionaire-who-bet-on-apple/ Cheers, Gio

The Best-Performing CEOs in the World https://hbr.org/2015/11/the-best-performing-ceos-in-the-world?utm_campaign=Socialflow&utm_source=Socialflow&utm_medium=Tweet Cheers, Gio

Mylan CEO Heather Bresch: We needed tax inversion in order to grow http://fortune.com/2015/10/14/mylan-ceo-heather-bresch-most-powerful-women-summit/?xid=soc_socialflow_twitter_FORTUNE Cheers, Gio

Mesa Laboratories In A Small Niche, High Margin Business http://seekingalpha.com/article/3573636-mesa-laboratories-in-a-small-niche-high-margin-business Cheers, Gio

I don’t know… That’s why I said I think they are not proven yet, and that I’ll keep monitoring the company… After all M&A is not something many people are good at… Actually, most people aren’t! ;) Cheers, Gio

As far as I know VRX has always responded to criticism very constructively: it has always been willing to add more information to its business results disclosures. Cheers, Gio

Well then, has anyone a good link to post and to share with other board members interested in TDG about the history of government intervention in the aerospace industry? Thank you! Gio

I respect your point of view, though mine keeps being different: I still believe Paulson will make money with both AGN and VRX. We will see! ;) Cheers, Gio

Small and cheap version of VRX and AGN, though not proven yet... Given its growth potential and its very low multiple, it might be worth keeping this company monitored. Horizon Pharma: Analyst Says 60% Upside. I Concur http://seekingalpha.com/article/3568156-horizon-pharma-analyst-says-60-percent-upside-i-concur Cheers, Gio

Jarden Announces Agreement To Acquire Jostens For Approximately $1.5 Billion http://www.jarden.com/for-investors/investor-news Cheers, Gio

For full disclosure, with VRX I have committed another error: I have not followed what I usually do and, instead of averaging down, I averaged up… Meaning that I bought more as the stock price was going up… Not a meaningful amount, but combined with the effect of a rising stock price, it made VRX one of my largest holdings. Surely a larger percentage of my portfolio than I should have allowed given its valuation. A mistake I have paid for! Now I hope I have learnt my lesson too! ;) Ok, enough with a topic that doesn’t have anything to do with TDG! Cheers, Gio

Of course I think the whole industry will grow handsomely. Who will grow fastest I cannot say, but I like to invest with a great capital allocator in a great industry. We will see! Anyway, thank you! Again I must admit I hadn’t thought about regulatory risk for TDG… Perseverare diabolicum! ;)... And surely it is better to think about it, before anyone else starts worrying! First thought: seat belts, faucets, plastic panelling etc surely don’t attract so much public attention as drugs do. Cheers Gio

No, you misinterpreted what I said… I never meant to say that TDG faces no regulatory risk… where did you get that? ??? Gio