Liberty

I keep hearing about that one but never really took the time to do a deep dive (since the kid was born I haven't as much time for new ideas, mostly just keeping up with my old ones, with a few exceptions). KCLarkin, or anyone else familiar with the business, can you share your thoughts on: Management's quality (operations, capital allocation, shareholder-friendly, integrity). What's their model to create value when they buy something? What are they doing differently from the average specialty pharma? Despite the recent 50% drop, the stock is still up 600% in less than 2 years. Was it that undervalued to begin with, or did they really create that much value in such a short period of time? I'm just trying to get the 10,000 feet overview. Thanks in advance.

Liberty, at 58:00, I ask Russo about his third largest position, Mastercard and how it compares to Visa. Very good! I haven't had time to listen to the whole talk yet, but I'm looking forward to what he has to say about that. Thank you for asking the question!

Thanks for posting, Norm :)

Listened to the album today, lots of fun. I get why this guy won a Macarthur award. Some great writing of very complex historical events.

Was it recently there? The wayback machine doesn't show it being there on any of the caches in 2015 or 2014. At any rate, it's readily available on CapIQ, or even via the wayback machine: https://web.archive.org/web/20140513173105/http://ir.valeant.com/files/doc_presentations/2Q13%20Presentation%20Final.pdf ETA: It is available on the 3q/4q 2013 caches, but not 2014 or 2015 that I could ascertain. I don't see how there is any confusion about this. The Q2 2013 presentation is where it has always been: http://ir.valeant.com/files/doc_presentations/2Q13%20Presentation%20Final.pdf Does nobody bother to look? Yep, right there: http://ir.valeant.com/investor-relations/events-and-presentations/2013/default.aspx Guess people didn't notice that there's a different page for each year.

Contact ValueAct: http://www.valueact.com/contact.pl I made a call to them. The receptionist told me to write an email to her and she will forward it to Jeff. Let's see what happens next. :) I can already picture the press release headline: ValueAct welcomes new partner Muscleman :D

I suspect they won't touch the offshore cash at least until after the next US election, to see if there's suddenly more appetite for tax reform.

In the past, they've used Sanitas as an example of a company that they improved by plugging into their multinational distribution system. I suspect that part of the improvement that we're seeing is that they started selling their products in many new territories, something that Sanitas couldn't do on its own. But this is just from memory, so I could be misremembering.

This works imo for “good news”… Instead, I want to post as many “bad news” as I can find… If they can be dismissed with a shrug of the shoulders, well I have lost the time of a click! ;) Cheers, Gio Sure, post the interesting bad news and counter-arguments. But you can skip articles written by people who obviously have no idea what they're talking about and just wanted to write a shocking headline to get pageviews. There's an infinite amount of trash on the internet, no need to spread it. By posting that link, you made me click it because there's an implied recommendation from you when you post something (why post it if you don't want people to go read it?). If you know it's crap, don't make people waste their time. That's all I'm saying.

Ahah!!! ;D ;D Usually I post and leave anyone to judge the content of those articles… But I agree with you… This is too much!! Cheers, Gio I don't think posting everything you find and leaving it to others to decide if it has value works. If everyone did that, the board would just be an unfiltered Google News. I suggest you only post what you think has real value or is particularly interesting.

Why do you post clickbait crap like this? ???

Oh wow, thanks for that suggestion. Might be the only musical (other than Dr. Horrible) that I end up liking. http://youtu.be/IBl3MQ8-Tt8

If anyone was curious to hear what Ackman said on Bloomberg today, here's the video: http://www.bloomberg.com/news/videos/2015-10-06/influencer-interview-bill-ackman From memory, he talks about GE, 3G, Heinz, VRX, Mike Bloomberg running for president, and some other things I can't remember at the moment.

Maybe they haven't found a buyer? Maybe it's so low maintenance and takes so little management time that it acts as kind of an annuity, so they're not in a hurry (ie. If they don't change the product, no need for much reinvestment, and they don't manufacture it themselves). But I agree, sounds like it would probably be best to divest if they can get a decent price for it.

http://www.bloomberg.com/news/articles/2015-10-06/solar-wind-reach-a-big-renewables-turning-point-bnef Interesting piece about how wind and solar can affect the capacity factor of fossil fuels and thus make them comparatively more expensive.

I wonder if maybe they were getting close to a big deal or merger with a large stock component and now it's in peril because of the low stock price. I believe they stuck to things where there was a clear cut fact to be corrected. "Organic growth was impacted by X%" "No, actually it was only by Y%", "They wouldn't take stock" "We never offered stock" "Hidden discontinued products significantly affect reported organic growth" "We disclose them and effect was 37bps", "They increased prices to meet guidance" "price increases were included in guidance", etc. Things like how you present CAGR in a presentation (where, btw, they showed a line for every company so anyone could do the math) or how you report divisions are more decisions based on a judgement that someone made. Maybe they made the wrong decisions or made mistakes, or maybe they made the right ones based on things that are less visible from the outside (going from a small cap to a megacap in a few years, integrating many businesses worldwide, maybe they needed to change the divisional reporting for reasons having to do with how they actually manage things), but this is not really the kind of stuff you can factually rebut, you can just talk about the reasons why you did it. Maybe they'll discuss those things on the next conference call, we'll see. I don't know how I feel about the 8K. The pros seem to be shocked that a big company would lower itself to address short sellers and bloggers. The attitude seems to be, unless you get attacked in the WSJ or on CNBC, you should keep a stately detachment and not bother. There's probably some wisdom to that. But on the other hand, it's 2015, not 1985. Some narratives get traction and go parabolic, and blog posts can nowadays get in front of just as many important people as a newspaper piece did back then. No need to buy ink by the barrel anymore. So maybe it's not such a bad idea to put some facts out there quickly in those situations, especially if there's a chance that if you wait weeks or months before defending yourself the narrative will just become accepted as fact in the meantime and the real business could be hurt (ie. big merger falls through because of low stock price, employee morale and retention affected, etc). I don't know what the best thing to do was...

Well, it certainly was brought to management's attention post Hillary-tweet and after a whole pack of short sellers came out with reports at the same time and then the New York Times joined in, that's for sure. Not sure they would care if they weren't making national news daily. But in this case, you were indeed correct.

Good points Eric. Could it also be as simple as the fact that rooftop solar is something that people can actually do, while they have no impact on utility solar? By that I mean that if the grid was already 100% utility solar, I doubt that people would put solar panels on their rooftops. But since right now the grid is mostly fossil fuels, those who want to get away from that see putting panels on their roofs as a way to change that, and since it actually costs them less than what they're paying their utility now, there's no downside even if there would potentially exist an even better opportunity if they somehow could invest in a utility solar installation.

They certainly do if the company has no competitive advantage/moat, or if it does but that moat is eroding. But certain industries have better ROICs than others, though, so a software or pharma business that reverts to the average ROIC in its industry might still do better than the average airline or junior miner all else being equal (and it never is, so this is just a theoretical exercise).

Good post too, Picasso. To me mind, "forever" is an ideal, but not something that you can pre-determine. Even if you think a business is very good and should keep creating value for the long-term, you need to monitor it for changes or for indications that you were wrong about it. In practice, "forever" also rarely means literally forever, but if you keep something 5-10-15 years, that might as well be forever compared to the average holding period in the market these days.

Very well said, Scott.

I think he looked at a Salix press release from before Valeant owned it: http://www.pharmacychoice.com/News/article.cfm?Article_ID=1306129 Here's the reason he gave you: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/valeant-pharmaceutilcals-international-inc-(vrx)/msg237845/#msg237845 Your 3.1bn number isn't for EM. If you go back one slide, you'll see that it's for more than that. I can't remember everything that you discussed with OM, but I know that I was talking about the 2016 EBITDA guidance and posted about how it didn't include IBS-D, and I recall that you disagreed, so that's my discussion with you. But at this point, I don't even dare go back and re-read all that, so I'm fine with moving on.

LC, I don't really see the similarity either. To me, this is more like junior miners doing risky exploration work, and those who find something will often be bought by a big producer. This M&A has replaced some exploration activity at the seniors, no doubt, but the exploration is still happening and it is indirectly funded by the seniors, and it might be executed more efficiently at the small companies because they are more nimble, less bureaucratic, less risk-averse, are headed by steely-eyed entrepreneurs rather than career-focused managers, etc.

http://www.forbes.com/sites/timworstall/2015/10/03/new-york-times-doesnt-understand-the-economics-of-valeant/

Don't take my tone to be anything other than genuine interest in finding out more about the company too. We're just discussing our findings, no need for white flags. I'll take you not mentioning the 2016 EBITDA guidance and IBS-D as agreeing with my take on it. I didn't mean to make this about Pfizer, I just thought they were an interesting piece of context after the recent media attention paid to their price increases. Pfizer doesn't break out pricing data. It's possible to calculate it using third party data, as you've said, and they make it easier because they provide data on more products, but they still don't do it. That's all I was saying. Blaming VRX for not doing it when others also don't do it just seems a bit unfair to me. As for the top 20 products representing a smaller portion of total, as I said, that's because they are much more diversified than most other pharmas and they have a smaller portion in RX. I don't think they necessarily want to break out every one of their OTC and branded generic and medical device separately for competitive reasons. If they can avoid giving all that data to competitors, especially on unpatented and/or cash pay products, they probably will (big Pfizer products are pretty much all patent protected afaik, so competitive dynamic with disclosure is different IMO -- I wonder how many products get broken out by other branded generic/OTC companies/device comapnies... Something I need to re-check). I agree that VRX has changed how it reports different divisions rapidly. But then, the company grew from basically a small cap into the #1-2 biggest company in Canada in a few years, acquiring almost 150 businesses. I think that makes explaining some organisational changes pretty easy (in fact, it would be weird if they had kept everything the same), but we can each have our standards and expectations. Their 10K is over 500 pages long, so I suppose that's few people's definition of "thin" :) Oh, one more thing. I don't think that what you call guidance for the EM revenue (which, as OM has pointed out, wasn't just EM revenue: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/valeant-pharmaceutilcals-international-inc-(vrx)/msg237845/#msg237845 ) was really guidance. Their official guidance is only for Revenue, Cash EPS, and Adjusted Cashflow from Operations and that's what they compare against when the year has passed, as you can see here for example: http://ir.valeant.com/files/doc_presentations/2014/Guidance%20presentation%20Jan%202014%20Final%20Final2.pdf When they update guidance, they only update those things. They then give the assumptions that go into that model, and sometimes they'll say how much they think will come from where (ie. x% from EM, y% from developed). I guess that's kind of soft guidance, but I wouldn't really consider that "a miss" if their predictions don't turn out to be exactly correct. If one part of the business does better than expected and another one does worse (FX big factor) and you still land in the middle of your guidance range, is that missing guidance when your guidance in the first place wasn't really for the split but about the rev/cash/ccfo numbers?