KCLarkin Posted October 22, 2015 Share Posted October 22, 2015 TO ALL SUFFERING LONGS: Through a series of tactical missteps and fat fingers, I have managed to inadvertently double down on this dog. So I guess I am officially a bull now. Link to comment Share on other sites More sharing options...
PatientCheetah Posted October 22, 2015 Share Posted October 22, 2015 some of us are not suffering longs but smiling ones ;) Link to comment Share on other sites More sharing options...
KCLarkin Posted October 22, 2015 Share Posted October 22, 2015 some of us are not suffering longs but smiling ones ;) I meant suffering from the relentless bearish bullshit (not the freefall). Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 22, 2015 Share Posted October 22, 2015 Even our fellow board member Schwab is spreading bad information on Seeking Alpha: http://seekingalpha.com/article/3589026-valeant-70-percent-downside-and-shocking-new-information-to-explain-the-drug-price-increases-and-subpoena Basically pointing out the difference in revenue on the slides concerning emerging market revenue. But slide 30 before slide 31 says this: " Emerging market branded generics, OTCs, and innovative products (e.g., Bedoyceta, Bioscard, Monopril)." That isn't just "emerging markets" when they are referring to $3.1 billion. I think the reason IR stopped responding to you Schwab is because they realized they are wasting their time arguing a question that demands no answer. Why do you keep insisting on this kind of analysis? I don't get it. We've already had this discussion. I've showed that the definitions all align. Slide 25 mentions 2 of the 3 products that you are quoting from slide 30. How does it make sense to have two separate emerging market reporting definitions when "emerging markets" is one of two reporting lines for revenue in the 10-k? Why is this so difficult to accept? Is it because everyone missed it? Link to comment Share on other sites More sharing options...
Picasso Posted October 22, 2015 Share Posted October 22, 2015 Where do the definition align? You're making my mind melt with this one. Over the last two weeks, I have called VRX's IR department over a dozen times regarding this topic. VRX has vehemently denied the existence of the presentation until I emailed them the link. Upon receipt of the link, VRX refused to provide any explanation for the contradicting EM revenue guidance figures within the presentation. There is no contradicting EM revenue guidance. Those are two completely different figures! Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 22, 2015 Share Posted October 22, 2015 Where do the definition align? You're making my mind melt with this one. Over the last two weeks, I have called VRX's IR department over a dozen times regarding this topic. VRX has vehemently denied the existence of the presentation until I emailed them the link. Upon receipt of the link, VRX refused to provide any explanation for the contradicting EM revenue guidance figures within the presentation. There is no contradicting EM revenue guidance. Those are two completely different figures! I am setting a terrible precedent by doing this. Do your own research and back up your claims! Extensive experience selling branded generics, OTCs, and innovative products Slide 24 Emerging market branded generics, OTCs, and innovative products (e.g., Bedoyceta, Bioscard, Monopril) Slide 30 Just to be sure, I included slide 25 which includes 2/3 products in slide 30's definition. So again, what specifically is wrong with my work? That isn't just "emerging markets" when they are referring to $3.1 billion. How does this sentence make any sense in context of slide 31? Link to comment Share on other sites More sharing options...
Picasso Posted October 22, 2015 Share Posted October 22, 2015 Well by golly I'm wrong about that then. I'm starting to get annoyed that we largely have to go off slide decks. I guess we're getting another one on Monday. Link to comment Share on other sites More sharing options...
scorpioncapital Posted October 22, 2015 Share Posted October 22, 2015 This is what is probably going to happen to some of these products sooner or later... http://arstechnica.com/science/2015/10/drug-with-rage-inducing-5000-price-hike-now-has-1pill-competitor/ Link to comment Share on other sites More sharing options...
berkshire101 Posted October 23, 2015 Share Posted October 23, 2015 I'm not long VRX, just enjoying the show from the sidelines. It goes into the too hard pile for me. I just hope it the story doesn't turn out to be like GT Advanced Technologies. http://www.joshuakennon.com/gt-advanced-technologies-bankruptcy/ Link to comment Share on other sites More sharing options...
Liberty Posted October 23, 2015 Share Posted October 23, 2015 Apparently the new Evercore dilligence is interesting. I've only seen the screengrab here, trying to get my hands on the full thing. If you can share it, please message me. Thanks. https://twitter.com/JacobWolinsky/status/657347563478261761 Edit: A kind soul has shared two reports by this analyst with me. He seems to be doing great work verifying stuff and digging it up. I haven't had time to read it all (time for bed, will continue tomorrow), but very interesting so far. Link to comment Share on other sites More sharing options...
Aberhound Posted October 23, 2015 Share Posted October 23, 2015 I haven't owned this in the past but I bought in at US$100 today after I saw the debt was trading at a 84.5 (the 6.125% bond is said to yield 8.5%). If management has sufficient cash they should buy debt to answer the short thesis. If they don't have sufficient cash then perhaps one of the hedge funds will do a preferred share purchase with warrants similar to Buffett's rescue of Bank of America. You issue preferred shares paying dividends then the company uses the proceeds to buy the debt at a discount. Or management can sell some brands and use the proceeds to buy debt at a discount. I continue to believe that TPP increases the negotiating power of pharmaceutical companies. If Congress really wanted to control drug prices they won't approve TPP, they wouldn't have set up the medical cartels, and they would give the government the power to negotiate drug prices or set up a reference pricing system to encourage use of equivalent but cheaper drug alternatives or allow imports of cheaper drugs. http://blogs.barrons.com/incomeinvesting/2015/10/22/more-punishment-for-valeant-as-bond-investors-bail/?mod=BOLBlog Link to comment Share on other sites More sharing options...
original mungerville Posted October 23, 2015 Share Posted October 23, 2015 I am not sure all the funds invested in this stock are "great investors". Paulson had poor track record (gold, HPQ), Ackman is more like a promotor ( he set up this giant conference where he presented HLF thesis). Ruane were wrong on FSLR( and i am not sure if they still hold VRX as in the lastest wsj story i found they no longer say they are a holder), Lou were wrong on carmax ,valueAct has a lot of analysts that come and go. Where did you see Ruane was out of VRX? If Ruane had said that, it would be plastered everywhere. I think he's saying that he saw something about Ruane where he didn't explicitly say that he held VRX, which doesn't mean anything. Yes, that's what i mean. Typing in my iphone.. Cnbc video says one of the top holder called them and said they no longer hold the stock. Didnt say which one. Wsj story doesnt mention Ruane as top holders which i found odd. But i agree it's pure speculation of mine. WSJ story doesn't mention Sequoia Fund because the story was on top hedge fund owners. I do not believe Sequoia Fund is a hedge fund. (And in any case, how the hell would the WSJ know who owns the stock right now or not given the volume that has been traded lately?) Link to comment Share on other sites More sharing options...
Liberty Posted October 23, 2015 Share Posted October 23, 2015 WSJ profile of Andrew Left: http://www.wsj.com/articles/the-short-who-sank-valeant-stock-1445557157 Link to comment Share on other sites More sharing options...
original mungerville Posted October 23, 2015 Share Posted October 23, 2015 Watched Andrew Left (Citron) on Bloomberg. Very interesting. When asked what he thought VRX was actually doing illegal, basically couldn't say, but said he was there to raise questions, and isn't it weird that one entity is suing another for $70m, that they have the same phone number, that's shady, etc. Mostly innuendo. When asked why he talked about a smoking gun and compared VRX to Enron if he can't say if there's anything illegal, he basically again said he's just raising questions. Says it's not his job to answer these questions, etc. Basically, he's just the guy screaming 'Enron' in a crowded theater after selling short. Not a bad position to be in, I suppose. Edit: http://www.bloomberg.com/news/videos/2015-10-22/valeant-s-response-amateurish-citron-s-left What a joke this Andrew Left is out of Citron. Just like AZ Value' blog, John Hempton's "analysis" and the crap Schwab keeps posting frankly. And of course you got Boyd involved as an "investigative" journalist along with other "journalists" who are in with the short sellers. The fake reality which has been created is extremely interesting here. And now you have other news outlets spewing the same crap because they are just relying on Boyd and his "journalist" friends. It has created a wonderful price in the stock though. Link to comment Share on other sites More sharing options...
original mungerville Posted October 23, 2015 Share Posted October 23, 2015 Even our fellow board member Schwab is spreading bad information on Seeking Alpha: http://seekingalpha.com/article/3589026-valeant-70-percent-downside-and-shocking-new-information-to-explain-the-drug-price-increases-and-subpoena Basically pointing out the difference in revenue on the slides concerning emerging market revenue. But slide 30 before slide 31 says this: " Emerging market branded generics, OTCs, and innovative products (e.g., Bedoyceta, Bioscard, Monopril)." That isn't just "emerging markets" when they are referring to $3.1 billion. I think the reason IR stopped responding to you Schwab is because they realized they are wasting their time arguing a question that demands no answer. Why do you keep insisting on this kind of analysis? I don't get it. Maybe he is being paid? Why else? He can't be paid that much though because he is so bad at it. AZ Value probably gets higher pay, he is a little more subtle, a little more intelligent in the way he goes about it, but in the end just a tool spreading misinformation based on analysis that doesn't add up. Link to comment Share on other sites More sharing options...
Guest roark33 Posted October 23, 2015 Share Posted October 23, 2015 There is an evercore presentation floating around that provides a significant clarity on the "accounting issue" with R&O. In short, Philidor was buying R&O as backdoor way into CA market. Purchase price was negotiated upfront and once R&O realized the volume that was coming from Philidor, R&O decided to stop cause problems to renegotiate the price of the deal. It makes a lot of sense, only sensitive question is whether Philidor was doing something illegal buying R&O after being denied CA license--and can VRX be held liable for those actions. The main short case this week has been the channel stuffing questions. I think those will be resolved and this CA license issue will become the main focus--however, I believe that issue will be very small in the grand scheme of things. I expect VRX to clarify this on Monday. I don't know where it will trade, but I doubt we see single digits again after Monday. Presentation has watermark, otherwise I would post. It is real research, has internal emails, invoices, etc. I am not even sure how he got the stuff, but I think it answers most of the main questions, except the CA license issue. Link to comment Share on other sites More sharing options...
Liberty Posted October 23, 2015 Share Posted October 23, 2015 I've only had a chance to read it very quickly, but the latest Evercore ISI report by Umber Raffat is really worth checking out. Untangles a lot of stuff and rules out some accusations. Also interesting info that Philidor bought 10% of R/O for $350k. These things are tiny. No wonder that a large cap might not have disclosed them as material and lumped them with other tiny deals. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 23, 2015 Share Posted October 23, 2015 The Evercore report absolutely demolishes Citron's theory. I wonder if he will issue a retraction? No, too busy swimming in money. Link to comment Share on other sites More sharing options...
plato1976 Posted October 23, 2015 Share Posted October 23, 2015 without deeply digging into this, but I feel it's a stretch to call VRX a fraud However, this is not what we care - we want to know if all the past growth was due to some kind of aggressive sales strategy that won't sustain in the long run and doesn't make economics sense - if that's the case we should assign the past valuation to VRX and I am not sure what's the proper valuation if we assume a conservative profitability (esp. w/ so many debts) The Evercore report absolutely demolishes Citron's theory. I wonder if he will issue a retraction? No, too busy swimming in money. Link to comment Share on other sites More sharing options...
loganc Posted October 23, 2015 Share Posted October 23, 2015 Sorry to be a moron, but can you guys link to the Evercore report Link to comment Share on other sites More sharing options...
FiveSigma Posted October 23, 2015 Share Posted October 23, 2015 Sorry to be a moron, but can you guys link to the Evercore report +1 Link to comment Share on other sites More sharing options...
merkhet Posted October 23, 2015 Share Posted October 23, 2015 There is an evercore presentation floating around that provides a significant clarity on the "accounting issue" with R&O. In short, Philidor was buying R&O as backdoor way into CA market. Purchase price was negotiated upfront and once R&O realized the volume that was coming from Philidor, R&O decided to stop cause problems to renegotiate the price of the deal. It makes a lot of sense, only sensitive question is whether Philidor was doing something illegal buying R&O after being denied CA license--and can VRX be held liable for those actions. Curious if he has good proof of the intent to renegotiate because that's surprisingly similar to the story I pulled out of my ass from earlier. Link to comment Share on other sites More sharing options...
giofranchi Posted October 23, 2015 Author Share Posted October 23, 2015 4X2016 FCF is better than 7x. I would be then happy to sell it at 15-18x next year. I am waiting for the short thesis to fully play out...this is a fun stock especially if you can get the timing right 8) I agree. But I still don’t think the freefall in stock price has been due to valuation (like you seem to believe). And I still think that, if VRX definitely proves it is not a fraud, it could be trading for 15-18x FCF for many years in the future, and in the meantime keep growing its FCF at high rates. If you sell at 15-18x, you’ll end up leaving lots of money on the table. This of course is theory… Because, the only thing that matters now is that VRX gains back the confidence of the public and institutional investors. Will it ever succeed? We will see. Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted October 23, 2015 Author Share Posted October 23, 2015 I always find it fascinating how in a business environment that is neither good nor bad, companies that have cash flow and would otherwise just chug along, manage to shoot themselves in the foot and implode - for no apparently good reason. VRX has 30 billion in debt and equity of 6 billion and cash flow of what 1.7 billion (in run-off I might add)? It's like a 5% return on invested capital after interest - mostly acquisitions. Even less for a buyer of the stock. But of course if you operate like a bank at 5:1 leverage that return looks like 25%. Everything implied growth in drug prices to far offset run-off and inflation. I'm not sure if their model is anything else but price increases to justify the pre-crash stock price. Of course, if the leverage was 10:1 returns would be 50%! Or 20:1...Who judges where the blow-up potential occurs? How can Ackman in his right mind compare this in his Value conference presentation to the platform of Berkshire with such a reckless financial structure? Has he gone bonkers? You have some short sellers like now push the equity down much more and soon you have 'Game Over' written on the screen. I understand you don’t like debt. I don’t like it either. And I have always said so. But why? Because people make mistakes. And usually use debt to buy businesses that perform poorly. In the case of VRX I think the businesses they have bought are all extremely profitable, with net margins of 20%+, and I also believe Pearson knows the industry better than almost anyone else. Therefore, I have come to the conclusion that major mistakes have a low probability to occur. That’s why I don’t think debt is so dangerous here as it is in most cases. Of course, I might be wrong. We will see. Cheers, Gio Link to comment Share on other sites More sharing options...
merkhet Posted October 23, 2015 Share Posted October 23, 2015 I've only had a chance to read it very quickly, but the latest Evercore ISI report by Umber Raffat is really worth checking out. Untangles a lot of stuff and rules out some accusations. Also interesting info that Philidor bought 10% of R/O for $350k. These things are tiny. No wonder that a large cap might not have disclosed them as material and lumped them with other tiny deals. I've only seen the screenshot, but it seems like Evercore says that Philidor does not consolidate R&O. However, Valeant says that it consolidates both Philidor & R&O. What's going on here? Is Evercore wrong or is Valeant wrong? Link to comment Share on other sites More sharing options...
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