VRX - Valeant Pharmaceuticals International Inc.

[Liberty]

I don't think you have to know the future to find VRX a good investment. You just have to look at the past and present, understand the model and assets, and develop some level of comfort with management's talent and integrity.

 

Basically, the same as any other investment.

 

To each their own. A lot of people also wouldn't touch the Malone businesses because they have poor GAAP numbers, lots of debt, do a lot of M&A, and are very complex.

[giofranchi]

Your best bet is to find mean reversion scenarios at massive discounts to IV.

 

And what is a "massive discounts to IV", if you don't know what's the true IV of a business? How could you know the IV of a business, if you don't think you can understand its future prospects? Of course, the answer is that you cannot.

 

Entrepreneurs might be wrong many times, because many times they have a businessman mindset, and lack the mindset of the investor or capital allocator.

 

When you put together those two mindsets, you get much higher probabilities of being on the right path to business success.

 

If you think you can believe "academic reserch", well then I guess you will find some statistical strategy to play the market that suits your temperament well, and be successful... At least, that's what they say, isnt't it? ;)

 

Gio

[giofranchi]

To each their own. A lot of people also wouldn't touch the Malone businesses because they have poor GAAP numbers, lots of debt, do a lot of M&A, and are very complex.

 

The difference I find with Malone's businesses is that the Liberty family is not trying to "revolutionize" anything... Malone isn't trying to change how cable TV is done...

 

Instead, what I think I am not able to judge is Pearson's true ability to change how money is spent and capital is allocated in the pharma industry... If you think of it, that is a HUGE bet!... If he truly is successful, he will be wildly so!!!... But what if he is wrong, instead? With all that debt? And a lot of people who have been working in the pharma industry for decades actually think he might be wrong...

 

I don't know... Really...

 

What I am sure about is, if he is proven right, VRX is trading at a "massive discount" to its IV! On the contrary, if he is wrong, VRX might be fairly valued (or even overvalued) today.

 

Gio

[Liberty]

To each their own. A lot of people also wouldn't touch the Malone businesses because they have poor GAAP numbers, lots of debt, do a lot of M&A, and are very complex.

 

The difference I find with Malone's businesses is that the Liberty family is not trying to "revolutionize" anything... Malone isn't trying to change how cable TV is done...

 

Instead, what I think I am not able to judge is Pearson's true ability to change how money is spent and capital is allocated in the pharma industry... If you think of it, that is a HUGE bet!... If he truly is successful, he will be wildly so!!!... But what if he is wrong, instead? With all that debt? And a lot of people who have been working in the pharma industry for decades actually think he might be wrong...

 

I don't know... Really...

 

What I am sure about is, if he is proven right, VRX is trading at a "massive discount" to its IV! On the contrary, if he is wrong, VRX might be fairly valued (or even overvalued) today.

 

Gio

 

TCI was pretty radical in its model back in the day (Liberty Global's model is based on that), and before Malone had a multi-decade track record, many didn't trust it; and today, you could find all kinds of other issues for the various Malone businesses too. Cord cutters, competition from telecoms, will Sirius be killed by smartphones streaming, is QVC going the way of dinosaurs, will the ecommerce businesses ever turn around, etc.

 

You have to answer these questions to be comfortable with the businesses.

 

Same with VRX. You have to answer certain questions to be comfortable with it.

 

Personally, I think the whole "VRX's model is revolutionary and radical" is a bit overplayed. The media loves that stuff, but the reality is a bit more down to earth.

 

What they're doing is focusing on certain products and markets that they think have more favorable characteristics, and not investing money where they see ROI being low, like a lot of R&D and SG&A bureaucracy. That's not revolutionary, that's just good capital allocation IMO. The only reason why it seems radical is because the rest of the industry mostly doesn't have that make-every-penny-count approach. They have huge margins, and so the institutional imperative made them fill all that headroom with SG&A and R&D and empire building in unfavorable markets, chasing blockbusters, etc, past the point of diminishing returns.

[giofranchi]

Liberty,

I don't even try to answer all those questions about Malone's companies... I simply believe Malone will go on doing what he does best: to shift capital from lower return assets to higher return assets. And I believe he knows the answers to all those questions much better than almost anyone else.

 

You might say the same is true for Pearson. Well, I think it is. But you said TCI was pretty radical... Therefore, this is my perspective on VRX:

 

As radical as TCI, and with the same unproven track record.

 

The Liberty family of businesses instead are less radical and Malone has a much longer and more proven track record.

 

And sincerely I don't know if I would have invested in TCI...

 

Gio

[coc]

There is an exception to every rule. That doesn't mean the rule is wrong. Besides 45 years ago you would have been buying one of the Nifty 50 because they are "wonderful" businesses - and you'd be underwater on a non-trivial number of those.  Someone who wants to own VRX would have looked at dying Textile business and a bunch of weird retail/consumer assets and laughed at you.

 

Its only ex-post that it seems so obvious that BRK was what you should own. What's the great stat about BRK meeting attendance? thirty years ago there were 250 people at his annual meeting - and that was already after anyone paying attention knew he was a genius.

 

My point is that we have a very very limited ability to find something like BRK, and we are way way way more likely to find a false-BRK than we are find BRK Mark II.  To think otherwise is to go against the odds.

 

Let me ask you this another way  - for every lucky Omahan who invested in BRK  in '65 because they personally knew WEB, how many people do you think thought they found someone who was "really really smart" and maybe even had some good numbers doing something along the way and totally flamed out? I've gotta think its 500-1.

 

Two things:

 

A. If I can give you major exceptions, it isn't a "rule." At least not how I define the term "rule." No different than the guy who kept adding sigmas to Berkshire's "luck" over the years, before he finally changed his mind and said maybe there was something in the sauce.

 

B.  I didn't ask about 1965. I said "20 or 30 years ago."

 

My question was this: Somewhere between 1984 (Superinvestors of G&D speech) and 1994, would it have been reasonable to conclude from a long public record and, by this point, an enormous amount of admiring press, that Berkshire was a demonstrably superior business? Would it also have been reasonable to conclude that, as they say in showbusiness, that model still had considerable "legs"? (Berkshire was really just beginning to develop its float, the way we know it today.)

 

Would it also have been reasonable to conclude, by this point, that it might be an intelligent idea to invest a major portion of your net worth alongside of Warren Buffett - who had by now well proven that he could build a far superior business and was doing so in a way that would almost certainly never set him back to "go"?

 

If I am not wrong about these things, then a very logical decision, somewhere in that period, would have been to go ahead and invest a major portion of your capital in Berkshire stock. Had you had the courage to ignore how impossible these things are to do, you would have $25 or $30 for every $1 invested, rather than $8-$9 in the general market.

 

If I'm right, the next question would be, what is the probability you would have achieved a superior result trading "Reversion to the mean stories trading at a massive discount to IV"?

 

I don't know the answer, and it will differ from person to person - but don't come back and tell me that what I'm outlining "isn't the sort of thing that works." If it was easy, we'd all be rich. But for those with a certain cast of mind, it's perfectly logical.

[Liberty]

Liberty,

I don't even try to answer all those questions about Malone's companies... I simply believe Malone will go on doing what he does best: to shift capital from lower return assets to higher return assets. And I believe he knows the answers to all those questions much better than almost anyone else.

 

That's one way to answer it. I fall partly there too - trust the jockey - and partly I have confidence in the individual businesses to hold their own (there's never a perfect world where you have no competition, but if you have a good competitive position you can still be very profitable and grow).

 

You might say the same is true for Pearson. Well, I think it is. But you said TCI was pretty radical... Therefore, this is my perspective on VRX:

 

As radical as TCI, and with the same unproven track record.

 

I think the main difference is that when TCI was around, aggressively buying companies, focusing on cashflow instead of GAAP earnings, keeping leverage and amortization charges high to shield taxes, there wasn't much to compare it too. Today with VRX, we can look back at TCI and all the other similar businesses and capital allocators, so the hurdle isn't nearly as high. Of course VRX detractors will say that the companies have nothing in common, but time will tell.

 

And sencerely I don't know if I would have invested in TCI...

 

I probably wouldn't have either, for the reason I just stated above. Today there's a lot more context to understand companies that do things that way.

[coc]

One thing I might add to the TCI and VRX discussion is that if you look back at the TCI years, the company was really on the precipice more than once. All that leverage worked in hindsight but going back through Cable Cowboy recently reminded me of how messy it all was. I can imagine an alternative world where TCI filed at one or more points. Carrying huge leverage is always a potential problem, though it can work.

[Liberty]

One thing I might add to the TCI and VRX discussion is that if you look back at the TCI years, the company was really on the precipice more than once. All that leverage worked in hindsight but going back through Cable Cowboy recently reminded me of how messy it all was. I can imagine an alternative world where TCI filed at one or more points. Carrying huge leverage is always a potential problem, though it can work.

 

From memory, it was on the precipice because of things that Magness did before Malone came on board. Malone's first few years were basically making sure the company survived and fixing the debt so that it was better structured (bulkheads!) and sustainable. Unless I'm misremembering things, after that they never had that situation again.

[topofeaturellc]

There is an exception to every rule. That doesn't mean the rule is wrong. Besides 45 years ago you would have been buying one of the Nifty 50 because they are "wonderful" businesses - and you'd be underwater on a non-trivial number of those.  Someone who wants to own VRX would have looked at dying Textile business and a bunch of weird retail/consumer assets and laughed at you.

 

Its only ex-post that it seems so obvious that BRK was what you should own. What's the great stat about BRK meeting attendance? thirty years ago there were 250 people at his annual meeting - and that was already after anyone paying attention knew he was a genius.

 

My point is that we have a very very limited ability to find something like BRK, and we are way way way more likely to find a false-BRK than we are find BRK Mark II.  To think otherwise is to go against the odds.

 

Let me ask you this another way  - for every lucky Omahan who invested in BRK  in '65 because they personally knew WEB, how many people do you think thought they found someone who was "really really smart" and maybe even had some good numbers doing something along the way and totally flamed out? I've gotta think its 500-1.

 

Two things:

 

A. If I can give you major exceptions, it isn't a "rule." At least not how I define the term "rule." No different than the guy who kept adding sigmas to Berkshire's "luck" over the years, before he finally changed his mind and said maybe there was something in the sauce.

 

B.  I didn't ask about 1965. I said "20 or 30 years ago."

 

My question was this: Somewhere between 1984 (Superinvestors of G&D speech) and 1994, would it have been reasonable to conclude from a long public record and, by this point, an enormous amount of admiring press, that Berkshire was a demonstrably superior business? Would it also have been reasonable to conclude that, as they say in showbusiness, that model still had considerable "legs"? (Berkshire was really just beginning to develop its float, the way we know it today.)

 

Would it also have been reasonable to conclude, by this point, that it might be an intelligent idea to invest a major portion of your net worth alongside of Warren Buffett - who had by now well proven that he could build a far superior business and was doing so in a way that would almost certainly never set him back to "go"?

 

If I am not wrong about these things, then a very logical decision, somewhere in that period, would have been to go ahead and invest a major portion of your capital in Berkshire stock. Had you had the courage to ignore how impossible these things are to do, you would have $25 or $30 for every $1 invested, rather than $8-$9 in the general market.

 

If I'm right, the next question would be, what is the probability you would have achieved a superior result trading "Reversion to the mean stories trading at a massive discount to IV"?

 

I don't know the answer, and it will differ from person to person - but don't come back and tell me that what I'm outlining "isn't the sort of thing that works." If it was easy, we'd all be rich. But for those with a certain cast of mind, it's perfectly logical.

 

You miss my point.  I'm not saying Buffett isn't great.  I'm saying its a not a great bet to bet on 1984 Buffett continuing to be great. I'd also mention that you could pretty much always buy BRK close enough to book that a loss in a liquidation scenario wasn't a horrible downside - which makes a big difference. It was never a bet on a company on an EBITDA multiple that implied really tremendous earnings growth.  That matters - a lot.

 

I also find it amusing that BRK is your counter example, as up until about ten-fifteen years ago he mostly picked up historically very good businesses at very cheap prices because something seemingly bad had happened to them, but that's neither here nor there.  Not to mention many of the Superinvestors of G&D-ville were basically doing something even closer to what I am telling you.

 

But lets look at the math:

On 8/31/84 BRK was 1290. Its 200000 today.  So over the last 30 years Buffett has compounded at 18.3%.  The S&P assuming dividend reinvestment returned 11.16%.  A basket of cheap stocks (EV/EBIT, P/B) returned something like 3.5% - 4.5% better than the S&P over the last 40 years.  So lets say the basket returns you 15.16% over that time frame.

 

So you got 3.1% for Buffett risk - which was and is essentially un-underwriteable.  For all you know that 65-85 time could have been luck. Warren could have gotten hit by a bus, or something crazy that even he didn't know about could have been lurking in an insurance sub. 

 

And that's with you investing with the single greatest investor of recorded history. If you picked a two stock portfolio of BRK and something else the odds are extremely good you underperformed dumb value.

[coc]

One thing I might add to the TCI and VRX discussion is that if you look back at the TCI years, the company was really on the precipice more than once. All that leverage worked in hindsight but going back through Cable Cowboy recently reminded me of how messy it all was. I can imagine an alternative world where TCI filed at one or more points. Carrying huge leverage is always a potential problem, though it can work.

 

From memory, it was on the precipice because of things that Magness did before Malone came on board. Malone's first few years were basically making sure the company survived and fixing the debt so that it was better structured (bulkheads!) and sustainable. Unless I'm misremembering things, after that they never had that situation again.

 

If you have the book, check out the chapter entitled "Chasing too many rabbits?" About the 90s. After Malone installed Brendan Clousten and started to pull back, TCI started to get into big trouble and Malone had to swoop in and well, be Malone. He managed through it, as he had with out crises, but it sort of illustrates what Buffett has said so eloquently about leverage being like a knife in the steering wheel. Almost every highly leveraged entity eventually faces this. (Another example is Murdoch, another brilliant guy who almost went under with all the debt in the 90s.)

[coc]

You miss my point.  I'm not saying Buffett isn't great.  I'm saying its a not a great bet to bet on 1984 Buffett continuing to be great. I'd also mention that you could pretty much always buy BRK close enough to book that a loss in a liquidation scenario wasn't a horrible downside - which makes a big difference. It was never a bet on a company on an EBITDA multiple that implied really tremendous earnings growth.  That matters - a lot.

 

I also find it amusing that BRK is your counter example, as up until about ten-fifteen years ago he mostly picked up historically very good businesses at very cheap prices because something seemingly bad had happened to them, but that's neither here nor there.  Not to mention many of the Superinvestors of G&D-ville were basically doing something even closer to what I am telling you.

 

But lets look at the math:

On 8/31/84 BRK was 1290. Its 200000 today.  So over the last 30 years Buffett has compounded at 18.3%.  The S&P assuming dividend reinvestment returned 11.16%.  A basket of cheap stocks (EV/EBIT, P/B) returned something like 3.5% - 4.5% better than the S&P over the last 40 years.  So lets say the basket returns you 15.16% over that time frame.

 

So you got 3.1% for Buffett risk - which was and is essentially un-underwriteable.  For all you know that 65-85 time could have been luck. Warren could have gotten hit by a bus, or something crazy that even he didn't know about could have been lurking in an insurance sub. 

 

And that's with you investing with the single greatest investor of recorded history. If you picked a two stock portfolio of BRK and something else the odds are extremely good you underperformed dumb value.

 

The problem is you were saying before that buying into great businesses and sitting with them for some time "doesn't work" and "isn't what the studies say works." I'm making the case that you're far, far overstating your case. I agree, basic buy and sell, cigar butt value investing works just fine. If that's what you like to do, you're smart to go for it.

 

But you're overplaying a good hand. There are other perfectly logical ways to go about things. Charlie Munger likes to tell a story about his uncle who invested in less than ten things in his whole life, all near cinches, and ended up safely rich. Buffett likes to tell the story of how the investors of Graham-Newman made more money in GEICO than all the other trading combined.

 

And yes I know, to you, this is only hindsight and is not practicable as a real time approach. But I strongly disagree. I think there are identifiably superior businesses available at very average prices, often enough to be useful over a lifetime of investment with the right mindset.

 

To address your criticism of Berkshire directly, I think you're wrong but I can see we won't agree so I'll drop it. No, I don't think it's reasonable to conclude that 65-85 would have been "just luck." You'd have had to look at the results, how they were achieved, and if those forces were likely to remain in place for the next ten or twenty years. Same as the analysis with any investment. (Including the modern examples you're dismissing.)

 

If Buffett had gotten run over, Berkshire would not have been what it became, and you would have had to find something else. I agree. But if you'd been smart about price paid, you'd have come out just fine.

 

I used that particular example because it's familiar to everyone but if you'd like others, I'm happy to oblige. How about investing a substantial sum in MasterCard at any point since it came public? How about the Union Pacific railroad over the past ten or fifteen years? Etc. I don't think it would have taken outstanding brilliance to have seen the forces in places that would carry those businesses forward, and they have very often traded at extremely reasonable prices. If my grandmother came to me and said she'd just put half of her money in MasterCard five or ten years ago, would that have kept me up nights? Not particularly.

 

Again, I know you won't agree. It isn't your thing. But you have to recognize that this is one way many smart people with limited resources can reasonably approach the world. If some people on the board put Valeant or Post or whoever in that category...I don't see any great problem with it in theory. I don't happen to agree in either of those cases but I can see the idea.

[Liberty]

If you have the book, check out the chapter entitled "Chasing too many rabbits?" About the 90s. After Malone installed Brendan Clousten and started to pull back, TCI started to get into big trouble and Malone had to swoop in and well, be Malone. He managed through it, as he had with out crises, but it sort of illustrates what Buffett has said so eloquently about leverage being like a knife in the steering wheel. Almost every highly leveraged entity eventually faces this. (Another example is Murdoch, another brilliant guy who almost went under with all the debt in the 90s.)

 

Good point, though in the context of the discussion, I would say that this was a change of jockey that led to the problem.  No two business leaders have the same capital allocation skills, strategic mind, operational skills, etc. If a big part of your thesis about Valeant is Pearson, or about Liberty Media is about Malone, if someone else takes over, you have to do your homework all over again and consider selling.

[coc]

If you have the book, check out the chapter entitled "Chasing too many rabbits?" About the 90s. After Malone installed Brendan Clousten and started to pull back, TCI started to get into big trouble and Malone had to swoop in and well, be Malone. He managed through it, as he had with out crises, but it sort of illustrates what Buffett has said so eloquently about leverage being like a knife in the steering wheel. Almost every highly leveraged entity eventually faces this. (Another example is Murdoch, another brilliant guy who almost went under with all the debt in the 90s.)

 

Good point, though in the context of the discussion, I would say that this was a change of jockey that led to the problem.  No two business leaders have the same capital allocation skills, strategic mind, operational skills, etc. If a big part of your thesis about Valeant is Pearson, or about Liberty Media is about Malone, if someone else takes over, you have to do your homework all over again and consider selling.

 

Yeah you know, I agree with you here, and that sort of thing tends to bother me. Again, all that leverage...it can work with the right person and business. Many of the stories in The Outsiders are primarily the successful use of leverage. (My opinion.)

 

But sometimes when I see these things that take careful and brilliant management to keep from going haywire...for better or worse, they end up in my "no" pile. Like I said above, I can fairly understand someone disagreeing with that. But even if you do, it's always good to see it for what it is, as best as possible.

[Liberty]

Looks like Allergan is not in active talks with Salix after all. "Dormant" is the word that Bloomberg uses:

 

http://www.bloomberg.com/news/2014-08-20/allergan-talks-to-buy-salix-in-defense-move-said-to-be-dormant.html

[ItsAValueTrap]

To each their own. A lot of people also wouldn't touch the Malone businesses because they have poor GAAP numbers, lots of debt, do a lot of M&A, and are very complex.

 

The difference I find with Malone's businesses is that the Liberty family is not trying to "revolutionize" anything... Malone isn't trying to change how cable TV is done...

 

Instead, what I think I am not able to judge is Pearson's true ability to change how money is spent and capital is allocated in the pharma industry... If you think of it, that is a HUGE bet!... If he truly is successful, he will be wildly so!!!... But what if he is wrong, instead? With all that debt? And a lot of people who have been working in the pharma industry for decades actually think he might be wrong...

 

I think Malone was far more revolutionary than Pearson.  Malone was always interested in value creation:

- The smart TV.  This used to be a big deal back when Microsoft bought WebTV.

- @Home / broadband Internet

- new cable channels

- lots and lots of co-operative partnerships in cable channels, new technology, etc.

- digital cable rather than analog cable

- 2-way communication over cable.  People thought that you'd be able to do things like home shopping on your TV.

 

The only radical thing that Pearson seems to be doing is to acquire companies instead of doing in-house R&D.  If you think that pharma R&D has been getting lower and lower returns, then this is arguably a good idea.

[loganc]

The only radical thing that Pearson seems to be doing is to acquire companies instead of doing in-house R&D.  If you think that pharma R&D has been getting lower and lower returns, then this is arguably a good idea.

 

I both agree and disagree with what you are saying about Pearson.  On one hand, Pearson has basically just decided to run a lean operating model in a sector that achieves extremely high gross margins.  There is nothing revolutionary about running a lean operating model.  As matter of fact, I think being a low cost operator has been a huge factor in the enormous success of various businesses - Wal-Mart being a good example.

 

On the other hand, if Pearson was doing something very pedestrian, then why would the VRX business model generate such a visceral response from critics?  I think you over-simplify the VRX model by saying they just "acquire companies instead of doing in-house R&D."  I don't think that is what is really happening.  I think the management is being disciplined in allocating capital.  In other words, if the returns on invested capital justify doing late stage R&D to get a new indication for a product then they will do it; else, use the capital to do accretive M&A transactions.  I think the VRX model is very much revolutionary in this regard, given the incentive structure in the sector (e.g. AGN mgmt getting paid based on R&D spend) and poor returns from R&D.   

[giofranchi]

Charlie Munger likes to tell a story about his uncle who invested in less than ten things in his whole life, all near cinches, and ended up safely rich. Buffett likes to tell the story of how the investors of Graham-Newman made more money in GEICO than all the other trading combined.

 

Though I obviously agree, these also are example that are as far from my experience as the academic studies about statistically playing the stock market...

 

Listen, my experience is simply this: I know a lot of very rich entrepreneurs, while I don't know a single person who got rich statistically playing the stock market. Period.

 

And the fact I also know many would-be entrepreneurs who instead have failed, doesn't change my experience in the least... Usually, I can always find good reasons for failure, as I find good reasons for success!

 

And yes I know, to you, this is only hindsight and is not practicable as a real time approach.

 

Well, I never said that to be right about business is easy... It certainly is not! But, the fact doesn't change: if you cannot muster enough confidence in your judgement, I think you'd much better find a safe, and possibly very well retributed, job, start saving a lot, and buy an index fund.

 

Gio

[giofranchi]

The only radical thing that Pearson seems to be doing is to acquire companies instead of doing in-house R&D.  If you think that pharma R&D has been getting lower and lower returns, then this is arguably a good idea.

 

Well, "radical" might not be the right word... Call it as you please... Imo the evidence is clear enough: it is 20 years now that the whole pharma industry has been strugling in finding good returns on capital invested in R&D... Instead, now Pearson is levering up his company on the assumption his way of allocating capital will yield good returns... As I have said, this is a huge bet! And if he is right, the returns for shareholders will be spectacular. On the other hand, if he is wrong, all that debt might turn out to be dangerous indeed.

 

Gio

[kmukul]

But lets look at the math:

On 8/31/84 BRK was 1290. Its 200000 today.  So over the last 30 years Buffett has compounded at 18.3%.  The S&P assuming dividend reinvestment returned 11.16%.  A basket of cheap stocks (EV/EBIT, P/B) returned something like 3.5% - 4.5% better than the S&P over the last 40 years.  So lets say the basket returns you 15.16% over that time frame.

 

it may be discussed somewhere else on the board, but i have a quick question if you dont mind. Is there a ETF or a fund which does this mechanical investing for you? I have read it works so many times something should exist which i can just use isnt it?

Thanks

Mukul

[coc]

Charlie Munger likes to tell a story about his uncle who invested in less than ten things in his whole life, all near cinches, and ended up safely rich. Buffett likes to tell the story of how the investors of Graham-Newman made more money in GEICO than all the other trading combined.

 

Though I obviously agree, these also are example that are as far from my experience as the academic studies about statistically playing the stock market...

 

Listen, my experience is simply this: I know a lot of very rich entrepreneurs, while I don't know a single person who got rich statistically playing the stock market. Period.

 

And the fact I also know many would-be entrepreneurs who instead have failed, doesn't change my experience in the least... Usually, I can always find good reasons for failure, as I find good reasons for success!

 

And yes I know, to you, this is only hindsight and is not practicable as a real time approach.

 

Well, I never said that to be right about business is easy... It certainly is not! But, the fact doesn't change: if you cannot muster enough confidence in your judgement, I think you'd much better find a safe, and possibly very well retributed, job, start saving a lot, and buy an index fund.

 

Gio

 

Thanks Gio, but my posts were not aimed at you. I do agree on your last point.

[Liberty]

http://dealbook.nytimes.com/2014/08/21/botox-maker-allergans-suit-against-valeant-wont-delay-special-meeting/

 

Looks like the Allergan lawsuit won't succeed in delaying the special meeting...

[Liberty]

http://nypost.com/2014/08/22/ackman-gets-needed-allergan-votes/

 

Activist Bill Ackman has the votes to call a special shareholders meeting of Allergan shareholders, and a federal trial isn’t going to stop him, a California federal judge said Thursday.

 

Judge David Carter mentioned the votes in a order denying the botox maker’s motion to expedite its case against Ackman, his Pershing Square hedge fund and Valeant, a Canadian drug company. [...]

 

Allergan has to call a special shareholders’ meeting within 120 days after at least 25 percent of shareholders request the meeting in a Delaware court.

 

Ackman is ready to go, according to [judge] Carter. “They have collected the required number of forms and intend to request a special meeting,” the judge noted.

 

 

$VRX has support of more than 30% of Allergan shares, will call a special mtg, @davidfaber reports

[rpadebet]

http://nypost.com/2014/08/22/ackman-gets-needed-allergan-votes/

 

Activist Bill Ackman has the votes to call a special shareholders meeting of Allergan shareholders, and a federal trial isn’t going to stop him, a California federal judge said Thursday.

 

Judge David Carter mentioned the votes in a order denying the botox maker’s motion to expedite its case against Ackman, his Pershing Square hedge fund and Valeant, a Canadian drug company. [...]

 

Allergan has to call a special shareholders’ meeting within 120 days after at least 25 percent of shareholders request the meeting in a Delaware court.

 

Ackman is ready to go, according to [judge] Carter. “They have collected the required number of forms and intend to request a special meeting,” the judge noted.

 

 

$VRX has support of more than 30% of Allergan shares, will call a special mtg, @davidfaber reports

 

Assuming all this is true, can someone explain what other options does the AGN Board and Management now have?

1. Wait for 4 months to call the meeting, collect paychecks until then, get thrown out and watch the company get bought

2. Start negotiating with VRX for their severance package in exchange for an earlier deal closing

[Liberty]

Assuming all this is true, can someone explain what other options does the AGN Board and Management now have?

1. Wait for 4 months to call the meeting, collect paychecks until then, get thrown out and watch the company get bought

2. Start negotiating with VRX for their severance package in exchange for an earlier deal closing

 

I suppose they could still try to burn the furniture by making a big acquisition (what leverage do they have to get a good price now that everybody knows they're desperate, though?) that makes them too hard to swallow for Valeant, or for assets that are unappealing to Valeant.

 

Pearson has already said that if Allergan did big buybacks, it wouldn't matter, they'd just adjust their offer.

 

Not too sure what else. Maybe some more aggressive PR tactics and lawsuits? Getting a bit late for that, though.

 

Interesting trivia: Pyott has been with Allergan since 1998 and he only owns 165,000 shares, out of 267.5 million outstanding (0.06%). He would own more if he hadn't been selling so much (now he says VRX is undervaluing AGN, but a few months ago he was selling big chunks of what he gets from options at half the price)... Insiders own almost nothing of AGN. Yet they try to control the company like they were owner-operators and try to block a shareholder vote...