VRX - Valeant Pharmaceuticals International Inc.

[Valueguy134]

Remember there won't be any R&D, so why value on peak cash flow, when it goes to generics after?

 

Why do you say there won't be any R&D when you know it's factually wrong? Why do you keep writing as if Valeant has a portfolio that is at risk of having significant impact from generics competition when it clearly isn't?

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/valeant-pharmaceutilcals-international-inc-(vrx)/msg233794/#msg233794

 

"People look at our R&D and say, that's a small percentage. But remember, big portions of our business like OTC/branded generics don't require much R&D. We probably spend 7-8% on R&D when you adjust it. It's low for some, but not as low as some."

 

New product launches coming out of the R&D pipeline are helping them grow organically at double digit, and they've guided more of that for the coming years. This isn't a run-off portfolio of products.

 

http://i.imgur.com/4QLdd5l.jpg

 

Maybe I'm reading it wrong, but in this slide, it looks like the generic impact pretty much wipes out the sales each year a drug comes off patents. Buy hey why not let me show you only a 2% impact, because lets compare apples and oranges (A single product vs. the whole).

 

Sorry, I'm officially done.

[LongHaul]

Not referring to you Loganc I think you are digging in.  The Note mistake is probably minor in the whole scheme of things.  Still a mistake though. But if they were under the gun and put a lot of info in there it could be excused.  I did not check the rest of the presentation though. 

 

I see where you are reconciling the 109.2m now.  Very helpful.

 

I was including the non-cash adjustments.  There is no explanation for them and they might be legit expenses that they are not including.  Btw the non-cash adjustments within severance and the contract termination costs net to $4.1m.

 

 

 

 

 

 

[Liberty]

Remember there won't be any R&D, so why value on peak cash flow, when it goes to generics after?

 

Why do you say there won't be any R&D when you know it's factually wrong? Why do you keep writing as if Valeant has a portfolio that is at risk of having significant impact from generics competition when it clearly isn't?

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/valeant-pharmaceutilcals-international-inc-(vrx)/msg233794/#msg233794

 

"People look at our R&D and say, that's a small percentage. But remember, big portions of our business like OTC/branded generics don't require much R&D. We probably spend 7-8% on R&D when you adjust it. It's low for some, but not as low as some."

 

New product launches coming out of the R&D pipeline are helping them grow organically at double digit, and they've guided more of that for the coming years. This isn't a run-off portfolio of products.

 

http://i.imgur.com/4QLdd5l.jpg

 

Maybe I'm reading it wrong, but in this slide, it looks like the generic impact pretty much wipes out the sales each year a drug comes off patents. Buy hey why not let me show you only a 2% impact, because lets compare apples and oranges (A single product vs. the whole).

 

Sorry, I'm officially done.

 

Guess even after 4 times of me pointing it out (recently, also earlier in the thread) you still missed the part where only 15% of the assets were at risk and where even those that are at risk are being replaced multiple times over by new pipeline products and organic growth in other products.

 

Another way to put it: Not the whole pharma industry faces patent cliffs. Valeant specializes in the parts that doesn't, even if they have some things that do (but which they get a good returns on even taking into consideration genericization).

[giofranchi]

I liked your writing Valueguy and agree. 

 

"No matter what types of issues are brought up, everything seems to be rationalized of why it makes sense. There is no way to convince someone here, or to even get them to contemplate the other side of the argument (why should management's claims be somewhat reflected in the 10-k's, am I right?). "

 

Ok, so let me sum this up:

 

I started this thread basically because I loved the business model and the super efficient Pearson.

 

Then the Allergan saga came along, accusing VRX they didn’t have organic growth (among many other things which didn’t bother me much). I wasn’t sure about Allergan’s accusations, but I was positive organic growth is important, and to tell the truth VRX wasn’t disclosing enough about it.

 

I therefore sold my investment, and started watching from the sidelines. Showing, at least I hope so!, that I am not emotionally attached to a business, but that, when I don’t see what I want to see, I am able to part ways with any investment of mine.

 

Almost a year passed without major acquisitions during which:

1) VRX’s GAAP Results started to converge with Adjusted Results very quickly,

2) VRX’s Debt went down very quickly,

3) Most important to me: VRX started disclosing organic growth on a quarterly basis.

 

I liked what I saw and I built again a meaningful position in VRX.

 

Fast-forward a few months and some guys, who have never expressed any opinion about VRX before, start calling it a fraud: it is true VRX is reporting organic growth finally… but it is useless because they are telling you lies! And why do they think VRX is a fraud?... Because an anonymous blogger seems to have found some inconsistencies in the numbers of a small acquisition made by VRX years ago… No matter VRX has made 140 acquisitions so far, many much larger than the one found by that anonymous blogger… If the numbers don’t add up for that acquisition, surely the whole VRX must be a fraud too! Right?... And has that anonymous blogger checked his so-called “analysis” with VRX? Has he asked questions to VRX’s IR? In order to be sure he hasn’t missed anything? Or misinterpreted something? Absolutely not!... In any argument you must hear both parties, before coming to a conclusion, won’t you agree? If you had lived through the Allergan saga, you would know this very well: every Allergan’s accusation was shown to be false, when VRX meticulously replied.

 

Sorry, if I don’t change my mind, it is not because I am not able and I never do… As I have already proved with VRX!... But it is because the reasoning that should change my mind again about VRX is either nothing new, or weak and unconvincing.

 

Cheers,

 

Gio

 

[giofranchi]

Valeant And AstraZeneca To Partner On Brodalumab

 

http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-And-AstraZeneca-To-Partner-On-Brodalumab/default.aspx

 

 

Gio

[giofranchi]

It seems another controversial acquisition...

 

http://www.fiercebiotech.com/story/astrazeneca-auctions-troubled-psoriasis-drug-valeant-445m/2015-09-01

 

 

Gio

[Ross812]

For someone who has mentioned how important good management is in thousands of posts, I'm surprised you gloss over how the company flat out lies when explaining their "deal model" vs demonstrating deal model performance.

 

Ross,

Cash EPS have nothing to do with their “Deal Model”. The great majority of pharma companies which buy other companies (see AGN, PRGO, ENDP, etc.) report Adjusted EPS, and they make the same adjustments VRX makes to calculate Cash EPS. Let’s say I have verified overall results instead of their “deal model”, and I have not find anything unusual.

If you think I am glossing over their IRR calculation, it is simply because I basically think it is no more than guesswork… I don’t really think we have enough information to come to any meaningful conclusion. Until, that is, they provide us at least one detailed example of how their “deal model” actually works…

By the way, you may ask: why haven’t they already provided that detailed example? Again: has Mr. Joffe discussed in great detail one acquisition Bidvest has made in the past? It might be so, I don’t know… But I would say that is the exception rather than the rule!

 

Cheers,

 

Gio

 

Gio,

 

You are just talking past me on this one. Saying your deal model is one thing (acquisition/restructuring costs added to purchase price), then reporting a number that has restructuring costs added into Cash Generated is a huge red flag in my opinion.

 

I am asking how you are comfortable with this. I have a lot of respect for Value Act and I would trust their analysis, but I don't understand how you can add restructuring costs back into your cash flow....

 

As for Bidvest. You are right, they don't provide a huge amount of detail for any given acquisition, but the numbers work out for the company as a whole. Their website gives an enormous amount of detail on how every operating segment of their business is performing.

 

One of my huge hangups with VRX is the way they operate in general. I guess there are two ways to do business. The Valeant model in which you gut the company you acquire and strive for ruthless efficiency, or the Berkshire/Bidvest model where you acquire good businesses and give them a competitive advantage i.e. Berkshire with capital or Bidvest with vertical integration. Think about VRX vs Berkshire or Bidvest in 20 years. If VRX stopped acquiring, their revenues would decline over the long term due to patent expiration and being out innovated.

 

What you have in VRX is a company that operates like a PE corporate raider. The model is good for investors, but destroys the companies they target. They don't produce anything, they don't innovate. They maximize current products and pay to develop the last few drugs in their pipeline and that's it. Hopefully they don't get too big and successful because that would literally be detrimental to our health.

 

Ross,

Have you read the Sequoia transcript?

They clearly say VRX adds resteucturing costs to the purchase cost... You think you have found an instance in which they didn't?... And what should that prove?... Without the right context, how could you judge? And what that should tell us about the remaining 139 acquisitions? Imo nothing.

The Sequoia guys have been following VRX for many years now... They have expressly said VRX does add restructuring costs to the purchase cost... A possible exception, which probably has an explanation we simply ignore, doesn't bother me much!

 

As far as VRX business model is concerned, I have no doubt about it, as I have already expressed many times before.

 

Cheers,

 

Gio

 

Gio,

 

It's not one instance. It is all 140 instances. You parrot managements number of 20% IRR on purchase price + restructuring expenses, but when management shows how well they are doing and achieving their 20% IRR goal; they add restructuring expenses back in to the total. This is how they do their accounting. Its not one far flung instance from years ago. I am asking why this is the correct way to account for acquisitions. Maybe I just don't understand the accounting behind it. I am not saying VRX is a fraud, though this does seem like a blatant lie unless their is a good reason for it.

 

 

[Ross812]

One of my huge hangups with VRX is the way they operate in general. I guess there are two ways to do business. The Valeant model in which you gut the company you acquire and strive for ruthless efficiency, or the Berkshire/Bidvest model where you acquire good businesses and give them a competitive advantage i.e. Berkshire with capital or Bidvest with vertical integration. Think about VRX vs Berkshire or Bidvest in 20 years. If VRX stopped acquiring, their revenues would decline over the long term due to patent expiration and being out innovated.

 

What you have in VRX is a company that operates like a PE corporate raider. The model is good for investors, but destroys the companies they target. They don't produce anything, they don't innovate. They maximize current products and pay to develop the last few drugs in their pipeline and that's it. Hopefully they don't get too big and successful because that would literally be detrimental to our health.

 

This is a fundamental misunderstanding of the model. Saying "if they stop acquiring..." misses the whole point. Acquiring is part of the point, but if they couldn't, capital would be redirected internally.

 

Most pharma companies have a huge bias toward internal development. Valeant is agnostic about where assets come from; some are developped internally, some are acquired, and some are licensed. As long as they meet certain financial criteria. This gives them a broader menu to pick from to select exactly the kind of assets that they want at the risk profile that they want (that's also why they focus on a lot of smaller products that don't interest most other big companies). It also helps that they are multinational but not truly global; they can focus on just certain geographies that grow faster or that have more bargains and ignore others, unlike most centralized pharmas that try to be truly global even if some areas are less attractive.

 

There's also the meme that VRX doesn't do R&D. As has already been pointed out, OTC and generics don't require much R&D, so if you normalize for that, they spend a decent amount on the rest of the business.

 

VRX doesn't spend a ton of money on R&D flyers with fingers crossed, hoping to find a blockbuster, they've looked at expected returns with that method today and it's not good enough, so instead they spend the development cash on more sure things and buy products outside the company and that makes things a lot more predictable. Since the pharma industry is quite fat (despite what the Allergan management claimed... Actavis ended up doing most of what VRX wanted to do), they can get nice synergies without cutting muscle (nobody's perfect but overall they seem to have a good track record); proof of that is in the organic growth in the segments that they've had for a long time and in the number of good things coming out of the pipeline. 3G and Capital Cities and Malone and most of the Berkshire companies understand how to operate very lean without cutting the wrong things, and I believe that VRX also does.

 

This makes sense, thank you. I do think PE may do a better job than some of the big firms evaluating risk/reward when looking for new drugs. I just worry without wasted capital that some drugs may not be discovered. More from a humanity perspective than an investors perspective. If you look at Google, they have wasted a tremendous amount of money but we have ended up with a lot of cool technology from all that wasted money.

 

VRX seems to be more interested in mundane drugs than blockbuster cures other firms go for so this may be an unfounded fear.

[giofranchi]

Gio,

 

It's not one instance. It is all 140 instances. You parrot managements number of 20% IRR on purchase price + restructuring expenses, but when management shows how well they are doing and achieving their 20% IRR goal; they add restructuring expenses back in to the total. This is how they do their accounting. Its not one far flung instance from years ago. I am asking why this is the correct way to account for acquisitions. Maybe I just don't understand the accounting behind it. I am not saying VRX is a fraud, though this does seem like a blatant lie unless their is a good reason for it.

 

Ok, sorry! I didn’t understand what you were referring to exactly… My fault!

 

But, like I have said, Sequoia adds back the restructuring charges to the purchase price. That’s what you’d like to see, isn’t it? And they seem to be quite satisfied with the results… During Q2 2015 Conference Call Pearson said their achieved outcome exceeds their deal model by 59%... If you add back restructuring charges then, you’d probably still get an IRR close to their stated goal!

 

So, what’s the matter here? Are we talking about the fact that Pearson & Co don’t know how to make an IRR calculation? Or, once again, do you fear they are purposefully deceiving their investors? Why?! When results are more than good enough adding back restructuring charges?... I still don’t get this…

 

Gio

 

[dwy000]

I have no dog in this fight so don't really care beyond entertainment value.  Is it a fraud?  Almost certainly not.  But I also don't like it when management twists how things are presented when they don't have to if the story is fully intact.

 

Either way, the one thing for certain is that I have lost a lot of respect for posters on both sides that I used to respect quite a bit.  Shame really.  If I wanted mud slinging and an inability to keep an open mind I'd just read the Yahoo message boards.

[Ross812]

 

But, like I have said, Sequoia adds back the restructuring charges to the purchase price. That’s what you’d like to see, isn’t it? And they seem to be quite satisfied with the results… During Q2 2015 Conference Call Pearson said their achieved outcome exceeds their deal model by 59%... If you add back restructuring charges then, you’d probably still get an IRR close to their stated goal!

 

So, what’s the matter here? Are we talking about the fact that Pearson & Co don’t know how to make an IRR calculation? Or, once again, do you fear they are purposefully deceiving their investors? Why?! When results are more than good enough adding back restructuring charges?... I still don’t get this…

 

Gio

 

That is the problem though. The presentations where VRX is showing 20%+ IRR is adding back restructuring costs into the deal.

 

Example:

 

They spend $20 for a company

$2 restructuring it

Then they generate $2 in operational cash flow

 

VRX accounting says: We spent $20; we made made $2; add back in those restructuring costs $2 = We spent $20 and generated $4 since the deal close. 20% IRR - Check mark.

 

Comparing to the actual cash generated - they made $2 off spending $22 for a 9% IRR.

 

They do this for every one of their acquisitions and I do not understand how it is correct. You say sequoia adds restructuring cost to the purchase price to calculate IRR and indeed the company says they do this too; but in the company's powerpoint presentations and their reported results they add restructuring costs back into cash generated. 

 

I just do not understand how this works. Maybe that is the way you are supposed to calculate IRR, but it doesn't make sense to me. How does it work?

 

uring Q2 2015 Conference Call Pearson said their achieved outcome exceeds their deal model by 59%... If you add back restructuring charges then, you’d probably still get an IRR close to their stated goal!

 

Exceeds the deal model by 59% means they are getting an IRR ~32%. If you look at the above example this adjustment makes a 20% Valeant IRR calc read as a 9% IRR. I don't have time to go back an cite what their actual OCF generated on the all their deals was but I believe it was around 12%.

[giofranchi]

By the way, I don’t know if this has already been mentioned:

 

AZ_Value has estimated a $4 billion difference between the VRX CFFO and the Cash generated by its acquisitions since 2008. Then he rightly says you shouldn’t add back restructuring charges nor depreciation / amortization. But then he also says VRX spends more than $1 billion per year in interest payments…

 

If you want to convey to shareholders a sense about how those acquisitions are performing, imo to add back interest payments makes perfect sense: they are simply showing shareholders how those businesses would perform as standalone companies, without the debt burden the mother company has incurred to purchase them.

 

Instead, of course interest payments are not added back when calculating Cash EPS for the whole company.

 

Therefore, imo the $4 billion gap could be easily justified simply adding back interest payments from 2008 until today.

 

Cheers,

 

Gio

 

[Liberty]

I just worry without wasted capital that some drugs may not be discovered. More from a humanity perspective than an investors perspective. If you look at Google, they have wasted a tremendous amount of money but we have ended up with a lot of cool technology from all that wasted money.

 

VRX seems to be more interested in mundane drugs than blockbuster cures other firms go for so this may be an unfounded fear.

 

This is a real argument. I don't think it has anything to do with financials for VRX, but it's a different thing worth thinking about.

 

I did consider it, and here's what my conclusions look like: Big pharmas are still very wasteful. The best place for a good portion of R&D is probably in smaller biotechs where drug discovery is the true incentive (rather than spend X% of revenue on amorphous R&D that keeps a lot of people employed by default whether they are working productively or not), or in those big pharmas that do have very productive operations. There are some things that big pharmas are best at, and they should keep doing those.

 

When Valeant buys a small company for 500m or a billion dollars for their products and pipelines, it's pretty much equivalent to having spent money to develop those products. Valeant's bet is that often if they had developed those products internally, it would have cost them more than what they spent (especially after synergies and tax), and the uncertainty would be much higher (ie. safer to spend more on the 'D' in R&D). The money still has been spent on the R&D, just in roundabout way.

 

It's a bit like in mining with majors and juniors. A lot of the riskiest exploration is done by juniors, and those that find something are then bought be the producers. When a major buys a junior, it's equivalent to having spent on exploration, only they did it through someone else but reduced risk by buying someone who has already found something.

 

I think it's good for society when resources aren't wasted. If big pharma is finding fewer things per dollar than smaller companies, then the capital should be redirected to smaller companies and the big ones should focus on what they are best at. Discovering drugs is still so profitable that capital will always go in the field, you don't have to worry about it drying up and drugs not being found. The question is just how that capital is allocated within the sector.

 

It's the same in other industries. You often have huge, slow, bureaucratic giants and small startups dancing all around them and building the future.

 

I don't think it's fair to blame Valeant for not focusing on life-saving drugs or cancer or whatever. They specialize in certain areas that do help people (derm, eye health, GI, etc) and others focus on different areas. You can't blame Boeing for not looking for an AIDS cure or GM for not building hospitals for burn victims; it's simply not what they do.

[giofranchi]

I don't have time to go back an cite what their actual OCF generated on the all their deals was but I believe it was around 12%.

 

If to that CFFO you add back interest payments, you'd probably get a much higher IRR. Wouldn't you?

And if you want to show your shareholders how each single business is performing, why is it wrong to add back interest payments?

Shareholders already know VRX as a whole is indebted, don't they?

 

Gio

[Ross812]

I don't have time to go back an cite what their actual OCF generated on the all their deals was but I believe it was around 12%.

 

If to that CFFO you add back interest payments, you'd probably get a much higher IRR. Wouldn't you?

And if you want to show your shareholders how each single business is performing, why is it wrong to add back interest payments?

Shareholders already know VRX as a whole is indebted, don't they?

 

Gio

 

2010 through Q2'15 OCF is 6B.

 

2010 through Q2'15 interest expense is 3.4B.

 

'10 to Q2'15 restructuring expense is 1.79B

 

Taxes in the period were 224M

 

Add taxes, interest, and restructuring and you get AZ's missing $5.4B

 

Now my question is:

 

VRX says they made 11.4B on an outlay of 35.7B

 

If you subtract the restructuring expenses from VRX reported number in their presentations of 11.4B and add it to their purchase price (which they say they do). I get:

 

9.61B generated cash off a 37.49B outlay.

 

VRX says they have generated 11.4B/35.7B ~ 32% cash off their deals.

 

The number appears to be 9.61B/37.49B ~25.6% cash off their deals.

[giofranchi]

2010 through Q2'15 OCF is 6B.

 

2010 through Q2'15 interest expense is 3.4B.

 

'10 to Q2'15 restructuring expense is 1.79B

 

Taxes in the period were 224M

 

Add taxes, interest, and restructuring and you get AZ's missing $5.4B

 

Now my question is:

 

VRX says they made 11.4B on an outlay of 35.7B

 

If you subtract the restructuring expenses from VRX reported number in their presentations of 11.4B and add it to their purchase price (which they say they do). I get:

 

9.61B generated cash off a 37.49B outlay.

 

VRX says they have generated 11.4B/35.7B ~ 32% cash off their deals.

 

The number appears to be 9.61B/37.49B ~25.6% cash off their deals.

 

Well, there is also the $1.4 billion from the sale of the portfolio of aesthetic drugs in 2014. And from $9.6 billion you’d get to $11 billion.

 

Gio

 

[bskptkl]

 

That's fine.  I tought about that.

 

What I want to see  is what numbers other people are using because IRR returns always seem to be instant when diacussing VRX. So I want to see what numbers they're using past 10 years, let's say over 20 for a company that cuts RD immediately. We'll talk about all of that with durability and stuff.

So people should take you up on your comment and lay out their own assumptions. Let's see for instance the growth assumptions you use if the majority of the cash will come in year 20 vs year 5 to achieve 20% IRR. Oh also square that with a payback period of 5 years.  That should be interesting.  I don't mind different assumptions, like I said. I just want to see them. That's all I want.

 

Enjoyed the piece. Took a stab at a growth model using 10% earnings growth rate, 8PE on first year earnings and 8PE terminal value with 6 year almost payback to get close to a 20% IRR model. See below

 

rate of growth 1.10

 

$(9,300)

1 $1,163 8 pe

2 $1,279

3 $1,407

4 $1,547

5 $1,702

6 $1,872 $8,969

7 $2,059

8 $2,265

9 $2,492

10 $2,741

11 $21,929 8 pe

 

irr 20.78%

 

 

[giofranchi]

FWIW

 

http://fortune.com/2015/08/19/this-is-what-its-like-to-take-female-viagra/?xid=soc_socialflow_twitter_FORTUNE

 

 

Gio

[Liberty]

FWIW

 

http://fortune.com/2015/08/19/this-is-what-its-like-to-take-female-viagra/?xid=soc_socialflow_twitter_FORTUNE

 

 

Gio

 

Thanks, interesting read.

 

It wasn’t that when we were together, things weren’t great, because they were. I don’t have an arousal problem, and it’s not that I don’t enjoy sex or that I don’t orgasm. From my neck down, my body responds perfectly. What’s missing is the lack of desire to start. I became an obligatory participant instead of an initiator. [...]

 

After a thorough evaluation, I was diagnosed with HSDD, and I decided to be part of the trial for Flibanserin, which has been dubbed the “female Viagra.” That description isn’t right: What I have isn’t a functional problem. Viagra sends blood flow down to the penis so that it gets erect. You can send blood flow to my vagina all day long and that’s not going to make me want to have sex. My problem is that my brain doesn’t feel desire. [...]

 

About two weeks into the trial, I was texting Ben in the middle of the day when I realized that I wanted to have sex. I had a flutter, and I don’t mean in my heart. So I texted him, “I think this is working.” I was back to my normal self.

 

Part of my hesitation about the drug was the stigma attached to it. Would I become a sex kitten? Would I want this all the time? Would I want to jump the bones of any man I saw? But instead, it was like filling back up a half-empty glass of water. It brought me back to where I was. Before long, I was the one suggesting we skip dessert and go back home to bed. [...]

 

I was on the trial for eight months, and after the FDA canceled the trial, my desire went away. I’ve tried other things. I read 50 Shades of Grey at least 12 times, and incorporated the fun, frisky stuff from that. I even tried testosterone, but I found that it worked much better in the workout room than the bedroom, and I was concerned about the side effects that I was experiencing.

 

Some people have told me that all I need is a bar of chocolate, or a glass of wine, or a beach in Tahiti, or a new partner. I get that. For a large number of women, that might be the case, and they are likely not HSDD patients. I’ve tried talking to therapists, and I think that can work for many people, too. But I’ve talked about it until I was blue in the face, and for me, all of those solutions are simply temporary fixes.

[giofranchi]

Valeant Pharmaceuticals To Acquire Synergetics USA

 

http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-Pharmaceuticals-To-Acquire-Synergetics-USA/default.aspx

 

 

Gio

[Liberty]

By the way, not that I want start more controversy, but I was wondering if the people who are having trouble with VRX's model have looked at Actavis (now Allergan)? It's similar in many ways, yet doesn't seem to generate nearly as much controversy. I suppose that's the difference between getting first in the media with negative framing and that being stuck in everyone's mind forever and being the second company that follows in the already beaten path with a lite version...

[giofranchi]

By the way, not that I want start more controversy, but I was wondering if the people who are having trouble with VRX's model have looked at Actavis (now Allergan)? It's similar in many ways, yet doesn't seem to generate nearly as much controversy. I suppose that's the difference between getting first in the media with negative framing and that being stuck in everyone's mind forever and being the second company that follows in the already beaten path with a lite version...

 

Imo a lot could be explained by these facts:

1) AGN has no net debt right now (that’s only now… because they will lever up again soon!)

2) They spend much more on R&D (that’s a more usual course of action… though I cannot tell if it is good for AGN shareholders’ financial returns…)

3) MOST IMPORTANT imo: they have not been nearly as successful as VRX so far… VRX’s success imo is the main reason why they generate so much controversy.

 

Cheers,

 

Gio

 

[Liberty]

That's what I meant by "lite version". They pay more, don't cut as much, their tax rate isn't as low, etc. I guess that's less controversial. But still, are people not having trouble figuring out the performance of each of their acquisitions, figuring out the organic growth rate of everything (which they don't even break out most of the time), and untangling the accounting? Or are they not even trying because it's so much more fun to pile on Valeant?

[merkhet]

I suspect that it's because:

 

(1) there are no ardent supporters of AGN to battle on this site

 

(2) the people who aren't investing in VRX probably also are not invested in AGN

 

I'd be interested if someone who was invested in AGN but very much against VRX would self identify. That would be an interesting conversation.

[thepupil]

i think it's also good to point out that 1.2% of AGN is sold short and 1% of VRX is. These aren't "hated" stocks. Those who are skeptical or confused (not an insult as i am certainly both of those things), for the most part choose not to own.