walt373 Posted October 24, 2015 Share Posted October 24, 2015 It's amusing to me to see the phrase bear raid thrown around like this. The year is 2015 guys. Vrx is a huge and liquid stock with tons of supposedly savvy investors involved. If some hacks published some sensationalist garbage, they would just be ignored. The story is that the stock has responded the way it has. The shorts got the air time because the stock tanked. Obviously youre free to have your own opinion but i can tell you interviews with shorts that moved the market are going to get a lot more clicks. btw you gotta wonder which large holders have been selling. A few have already said they bought more, who did they buy from? As for the hate against the hempton citron sirf crew. You might not agree with their tactics but they have a pretty long history of exposing frauds. Yes they got Fairfax wrong but their overall accuracy is very high. I remember seeing countless chinese rto longs on message boards attacking the messengers instead of objectively examining the new information. The reason they have credibility is because of their track record. Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted October 24, 2015 Share Posted October 24, 2015 http://www.bloomberg.com/news/articles/2015-10-24/valeant-director-ingram-says-pearson-has-board-s-full-support That doesn't mean anything. How many board of director members say anything negative about the CEO? I think it sets the tone for Monday though -I wasn't sure if they would try and circle the wagons or be on the warpath. The latter it seems. Link to comment Share on other sites More sharing options...
original mungerville Posted October 24, 2015 Share Posted October 24, 2015 It's amusing to me to see the phrase bear raid thrown around like this. The year is 2015 guys. Vrx is a huge and liquid stock with tons of supposedly savvy investors involved. If some hacks published some sensationalist garbage, they would just be ignored. The story is that the stock has responded the way it has. The shorts got the air time because the stock tanked. Obviously youre free to have your own opinion but i can tell you interviews with shorts that moved the market are going to get a lot more clicks. btw you gotta wonder which large holders have been selling. A few have already said they bought more, who did they buy from? As for the hate against the hempton citron sirf crew. You might not agree with their tactics but they have a pretty long history of exposing frauds. Yes they got Fairfax wrong but their overall accuracy is very high. I remember seeing countless chinese rto longs on message boards attacking the messengers instead of objectively examining the new information. The reason they have credibility is because of their track record. A track record with small cap shell Chinese companies is one thing, this is another. Link to comment Share on other sites More sharing options...
blainehodder Posted October 24, 2015 Share Posted October 24, 2015 Valeant uses Specialty pharma Philidor as consignment seller of drugs. In California Philidor/Valeant uses R&O since Philidor isn't licensed. Seems R&O didn't pay Philidor 70 million for drugs of Valeants. Valeant wrote letter trying to collect from R&O on behalf of Philidor. R&O deals with Phiilidor (VRX consignment seller) not VRX themselves. So they told VRX to pound sand on the 70m. VRX doesn't book revenue from Philidor until final sales to customer. Unclear if they would have booked the 70m sale from Philidor thru R&O philidor will either sue R&O to collect the 70m for Valeant, or Valeant will write it off. Regardless 70m is really chump change here. on the revenue booking, if VRX booked the 70m or not doesn't really matter. If they did and shouldn't have, they will get wrist slap If they have to write down 70m, it is really just not getting paid for some product. Just bad debt on a small % of sales. Not ENRON Set price jacking and specialty pharma drug pushing issues aside, at these prices it isn't a factor. Not a fraud so too cheap. And it doesn't really matter what it trades at on Monday. market won't sort this out. If you buy sub 150 you will probably make money. It tanked because of fraud accusations. Not getting paid for 70m is not fraud. It is bad debt. It didn't tank due to real issues with industry: price hikes, tax arbs, or specialty pharma drug pushing incentives. Those issues don't matter at this price. Valeant doesn't own Philidor, it has given them a loan, with a lien on the equity of Philidor. Hardly an absurd thing like Boyd plays that up to be. That basically sum it up? Blaine Link to comment Share on other sites More sharing options...
original mungerville Posted October 24, 2015 Share Posted October 24, 2015 Philidor: Valeant’s Brilliant Apple Store Strategy Steve Jobs, the co-founder of Apple, returned as interim CEO in 1997. According to Jobs biographer Walter Isaacson, Jobs began a concerted campaign to help sales by improving the retail presentation of Macintosh computers. Even with new products launched under Jobs' watch like the iMac and the PowerBook G3 and an online store, Apple still relied heavily on big box computer and electronics stores for most of their sales. There, customers continued to deal with poorly trained and ill-maintained Mac sections that did not foster customer loyalty to Apple and did not help differentiate the Mac user-experience from Windows. In fact, the retailer trend was towards selling their own generic in-house brand PCs which used even cheaper components than those by major PC makers, increasing retailer overall margins by keeping the manufacturing profits. This "provided a powerful profit motive to convert customers interested in buying a Mac into the owners of a new, cheaply assembled, house brand PC". -- Wikipedia Recognizing the limitations of third party retailers, Steve Jobs launched a captive retail network. The Apple Store is now the most profitable retailer in the world. Valeant, recognizing the limitations of 3rd party pharmacies, launched a captive pharmacy network named Philidor. This specialty pharmacy helps patients and doctors to navigate the complex insurance landscape, provides co-pay assistance, and helps patients adhere to their prescriptions. As a captive pharmacy, Philidor provides a level of service that 3rd party pharmacies are unwilling or unable to provide (Valeant’s equivalent of the Genius Bar). Philidor is a powerful strategic advantage for Valeant. By providing co-pay assistance, Valeant makes drugs more affordable for its patients. By making it easier for doctors to prescribe complicated drugs, Valeant gets more scripts. And by handling prescriptions through a captive pharmacy, Valeant reduces generic substitution. This strategy has worked brilliantly. Jublia, in particular, is a blockbuster thanks to a combination of Direct-to-Consumer advertising and Philidor. Mike Pearson knew this strategy was “checkmate” -- Philidor was even named after a chess move,. Importantly, this is a strategy not employed by Valeant’s competitors. To maintain this competitive advantage, Valeant attempted to keep the relationship with Philidor shrouded in secrecy. Philidor is a “special purpose entity”. Legally independent from Valeant, it is controlled via contractual and financial agreements. Special purpose entities are legitimate corporate structures, but were famously used by Enron to perpetrate a massive fraud. Unfortunately, this desire for secrecy came at a cost. When Philidor attempted to get licensed in California, they were denied because Philidor attempted to hide the true ownership of Philidor. To get around this, Philidor (via a shell name Isolani), entered into an agreement to purchase R&O, a pharmacy with a California license. As part of the purchase agreement, R&O granted Isolani all management of the pharmacy. Russell Reitz, the owner of R&O, was retained as the “Pharmacist-in-Charge” of R&O. The strategy was flawless. Millions of dollars in prescriptions were filled by R&O. Then Russell Reitz went rogue. He started withholding reimbursement cheques from insurance companies. He stopped communicating with Isolani. Lawyers were hired. Valeant demanded payment. Lawsuits were filed. Reitz’ motivations to go rogue are unclear. There are two current theories. After seeing the volume of business going through R&O, he attempted to negotiate a higher purchase price. Or, he became uncomfortable with the regulatory risk and tried to back out. Either way, he is holding millions of dollars hostage. Dollars that belong to Valeant and sit on their balance sheet as accounts receivable. A number of short sellers (Roddy Boyd, John Hempton), started to sniff out some of the details. They were unable to really connect the dots but things looked fishy. Then Andrew Left, a short seller, released a sensational report claiming that Valeant was using special purpose entities to create sham transactions. Valeant, he claims, is a pharmaceutical Enron. Despite a lack of evidence, Left was widely quoted in the Wall Street Journal and interviewed by the financial news stations. The stock, already weak, collapsed. Falling as much as 40% in a single day. Unfortunately, Left’s theory was pure fiction. Evercore, an independent equity research firm, uncovered a vast paper trail proving that there were no sham transactions. Invoices, shipping reports, emails, purchase agreements were easily found. Of course, the damage to investor sentiment was already done. A short seller, with no evidence, enriched himself at the expense of numerous innocent investors. Philidor is a brilliant strategy, well executed. Unfortunately, the PR hit on this issue may force Valeant to abandon a winning strategy. --- Note: This is my narrative based on the facts available. I think there is a very high chance exactly this, or something close to it, transpired. Understanding that legally Valeant does not own Philidor, one question I have is: Is it even illegal for a pharma manufacturer to own a specialty pharmacy through which it distributes only its drugs? Link to comment Share on other sites More sharing options...
original mungerville Posted October 24, 2015 Share Posted October 24, 2015 Valeant uses Specialty pharma Philidor as consignment seller of drugs. In California Philidor/Valeant uses R&O since Philidor isn't licensed. Seems R&O didn't pay Philidor 70 million for drugs of Valeants. Valeant wrote letter trying to collect from R&O on behalf of Philidor. R&O deals with Phiilidor (VRX consignment seller) not VRX themselves. So they told VRX to pound sand on the 70m. VRX doesn't book revenue from Philidor until final sales to customer. Unclear if they would have booked the 70m sale from Philidor thru R&O philidor will either sue R&O to collect the 70m for Valeant, or Valeant will write it off. Regardless 70m is really chump change here. on the revenue booking, if VRX booked the 70m or not doesn't really matter. If they did and shouldn't have, they will get wrist slap If they have to write down 70m, it is really just not getting paid for some product. Just bad debt on a small % of sales. Not ENRON Set price jacking and specialty pharma drug pushing issues aside, at these prices it isn't a factor. Not a fraud so too cheap. And it doesn't really matter what it trades at on Monday. market won't sort this out. If you buy sub 150 you will probably make money. It tanked because of fraud accusations. Not getting paid for 70m is not fraud. It is bad debt. It didn't tank due to real issues with industry: price hikes, tax arbs, or specialty pharma drug pushing incentives. Those issues don't matter at this price. Valeant doesn't own Philidor, it has given them a loan, with a lien on the equity of Philidor. Hardly an absurd thing like Boyd plays that up to be. That basically sum it up? Blaine Yes, that's about right. The only thing is this: How bad is it if Philidor is deemed to be not independent as it sells only, or primarily, Valeant drugs. My question is is that a big issue in the pharma business? Is it illegal? Or does it breach regulations in various states? Or is it just not how gentlemen sell drugs? Link to comment Share on other sites More sharing options...
blainehodder Posted October 24, 2015 Share Posted October 24, 2015 Valeant uses Specialty pharma Philidor as consignment seller of drugs. In California Philidor/Valeant uses R&O since Philidor isn't licensed. Seems R&O didn't pay Philidor 70 million for drugs of Valeants. Valeant wrote letter trying to collect from R&O on behalf of Philidor. R&O deals with Phiilidor (VRX consignment seller) not VRX themselves. So they told VRX to pound sand on the 70m. VRX doesn't book revenue from Philidor until final sales to customer. Unclear if they would have booked the 70m sale from Philidor thru R&O philidor will either sue R&O to collect the 70m for Valeant, or Valeant will write it off. Regardless 70m is really chump change here. on the revenue booking, if VRX booked the 70m or not doesn't really matter. If they did and shouldn't have, they will get wrist slap If they have to write down 70m, it is really just not getting paid for some product. Just bad debt on a small % of sales. Not ENRON Set price jacking and specialty pharma drug pushing issues aside, at these prices it isn't a factor. Not a fraud so too cheap. And it doesn't really matter what it trades at on Monday. market won't sort this out. If you buy sub 150 you will probably make money. It tanked because of fraud accusations. Not getting paid for 70m is not fraud. It is bad debt. It didn't tank due to real issues with industry: price hikes, tax arbs, or specialty pharma drug pushing incentives. Those issues don't matter at this price. Valeant doesn't own Philidor, it has given them a loan, with a lien on the equity of Philidor. Hardly an absurd thing like Boyd plays that up to be. That basically sum it up? Blaine Yes, that's about right. The only thing is this: How bad is it if Philidor is deemed to be not independent as it sells only, or primarily, Valeant drugs. My question is is that a big issue in the pharma business? Is it illegal? Or does it breach regulations in various states? Or is it just not how gentlemen sell drugs? I'm not a lawyer, but I don't see why it would be a problem. Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted October 24, 2015 Share Posted October 24, 2015 So my biggest qualm with philidor/R&O is when you align all the incentives (onboard everything) there is a huge tendency for the type of behavior certain not-to-be-named bloggers are asserting -namely robo-calling and being too eager to refill precriptions or provide many months supply of a certain foot ointment. This may be part of valeants genius but what happens now that it's exposed and out in the open -does this impair the predictability/reliability of VRX's quarterly beats? Insurance co's and presidential hopefuls will just let it slide? Link to comment Share on other sites More sharing options...
original mungerville Posted October 24, 2015 Share Posted October 24, 2015 Its apparently a problem. Otherwise, what are we talking about here? We have other pharma companies coming out and saying they don't rely on specialty pharmacies or that its only a small percentage of their sales and they are independent and sell the drugs of other manufacturers, etc etc. So if Valeant owned Philidor outright and Philidor only sold Valeant drugs, my question is, is that: a) Illegal b) Counter to regulations in certain or all states or c) Just perceived to be a conflict by most in the medical professional and therefore frowned upon (at least in the light of day) Link to comment Share on other sites More sharing options...
original mungerville Posted October 24, 2015 Share Posted October 24, 2015 So my biggest qualm with philidor/R&O is when you align all the incentives (onboard everything) there is a huge tendency for the type of behavior certain not-to-be-named bloggers are asserting -namely robo-calling and being too eager to refill precriptions or provide many months supply of a certain foot ointment. This may be part of valeants genius but what happens now that it's exposed and out in the open -does this impair the predictability/reliability of VRX's quarterly beats? Insurance co's and presidential hopefuls will just let it slide? This won't be the first time in the history of capitalism that somebody pointed to an overly eager salesman or channel. And Valeant doesn't even own the channel, it only has an option to buy it. Furthermore, the lawsuit with R&O demonstrates that just because you have an option to buy equity, it does not mean you control that company until you actually exercise that option. So I think that lawsuit is a great example of how Valeant doesn't control the business operations of R&O and Philidor despite potentially consolidating both as VIEs. Link to comment Share on other sites More sharing options...
blainehodder Posted October 24, 2015 Share Posted October 24, 2015 Its apparently a problem. Otherwise, what are we talking about here? We have other pharma companies coming out and saying they don't rely on specialty pharmacies or that its only a small percentage of their sales and they are independent and sell the drugs of other manufacturers, etc etc. So if Valeant owned Philidor outright and Philidor only sold Valeant drugs, my question is, is that: a) Illegal b) Counter to regulations in certain or all states or c) Just perceived to be a conflict by most in the medical professional and therefore frowned upon (at least in the light of day) I guess what I am saying is, what are we talking about here? It tanked because of fraud accusations. It didn't tank because of scrutiny on aggressive sales tactics of specialty pharmacies. People think it is a complete fraud. As in sales are not real. Not just some sales coming from aggressive tactics of badly incented dealers. People still think it is a complete fraud, with phantom sales to phantom corps and that won't chang no matter what happens on Monday. People heard Enron and hit sell. Set aside the real industry issues: price hikes, tax arbs, and specialty pharma drug pushing. At these prices it doesn't matter. It isn't a fraud, therefore it is too cheap. Hempton may or may not have valid arguments against specialty pharma tactics. Again, that is not why the stock is under 120 USD. It is where it is because of complete fraud accusations, and they are false. If the stock was 250 USD, those issues might actually matter to the question of making money on the stock. At 116, I really don't think it matters. Link to comment Share on other sites More sharing options...
original mungerville Posted October 24, 2015 Share Posted October 24, 2015 I totally agree with everything you said, that is a great summary like your first post. I bought all the way down as the stock crashed. But I am just trying to figure out the residual. Are we talking c) here - ie this is just frowned upon / unconventional with potential conflicts of interest? Link to comment Share on other sites More sharing options...
blainehodder Posted October 24, 2015 Share Posted October 24, 2015 Reasonable residual questions I can't answer them though unfortunately. Link to comment Share on other sites More sharing options...
original mungerville Posted October 24, 2015 Share Posted October 24, 2015 Great, I hope these types of articles keep coming out all weekend: http://www.barrons.com/articles/valeant-too-risky-to-touch-1445660804 The shorts will also add new things to look into by Monday as well. It'll be a long-term shit storm, but very profitable for longs who hold on. Link to comment Share on other sites More sharing options...
blainehodder Posted October 24, 2015 Share Posted October 24, 2015 Great, I hope these types of articles keep coming out all weekend: http://www.barrons.com/articles/valeant-too-risky-to-touch-1445660804 The shorts will also add new things to look into by Monday as well. It'll be a long-term shit storm, but very profitable for longs who hold on. Yup. I'm hoping for this to absolutely tank. Citron, Hempton, Longshorttrader/Daniel Yu/Gotham, Roddy Boyd, Sam Antar, Michelle Celarier, Marc Cohodes, Muddy Waters, Greg Farrell or any of these short report tree shakers can easily move the stock with a report directly before, or immediately after the conference call so Valeant doesn't have time to comment... said "person familiar with the matter". That would be a gift to value vultures. Link to comment Share on other sites More sharing options...
Picasso Posted October 24, 2015 Share Posted October 24, 2015 Its apparently a problem. Otherwise, what are we talking about here? We have other pharma companies coming out and saying they don't rely on specialty pharmacies or that its only a small percentage of their sales and they are independent and sell the drugs of other manufacturers, etc etc. So if Valeant owned Philidor outright and Philidor only sold Valeant drugs, my question is, is that: a) Illegal b) Counter to regulations in certain or all states or c) Just perceived to be a conflict by most in the medical professional and therefore frowned upon (at least in the light of day) I guess what I am saying is, what are we talking about here? It tanked because of fraud accusations. It didn't tank because of scrutiny on aggressive sales tactics of specialty pharmacies. People think it is a complete fraud. As in sales are not real. Not just some sales coming from aggressive tactics of badly incented dealers. People still think it is a complete fraud, with phantom sales to phantom corps and that won't chang no matter what happens on Monday. People heard Enron and hit sell. Set aside the real industry issues: price hikes, tax arbs, and specialty pharma drug pushing. At these prices it doesn't matter. It isn't a fraud, therefore it is too cheap. Hempton may or may not have valid arguments against specialty pharma tactics. Again, that is not why the stock is under 120 USD. It is where it is because of complete fraud accusations, and they are false. If the stock was 250 USD, those issues might actually matter to the question of making money on the stock. At 116, I really don't think it matters. Well said. I found something very strange given all the hoopla over the debt spreads. When I actually went into the market to buy up some Valeant bonds (they are limited to non-retail accounts such as QIB's or foreign buyers) there was almost none being actively traded. In fact the only real liquidity on the buy side was the 2025's and they were still offered around $85. Compare that to the credit default swap activity and it's a completely different story. Assuming someone is actually buying up the swaps to hedge out their debt, the swaps are trading above the yield on the bonds. So it's actually better to just sell your bonds if you really needed to derisk. But that isn't what we're seeing, rather a ton of activity on the credit default swaps without corresponding activity on the actual bonds. One would think that $30 billion of debt would involve a decent amount of selling. It leads me to believe that we're seeing similar stuff from the financial crisis where you short the stock, buy up the CDS, rinse and repeat. Only this time we've thrown in false allegations of "Enron." I think the winning trade would be to create a synthetic Valeant bond by selling the credit default swaps. Unfortunately I don't trade that kind of size. Link to comment Share on other sites More sharing options...
Guest roark33 Posted October 24, 2015 Share Posted October 24, 2015 https://www.dropbox.com/sh/narnzjrbtfqk83p/AAC2QjCdPoIsr58s3NGkiBWCa?dl=0 Here is the lawsuit in CA. This is the nuts and bolts of the issue. My big issue with Citron is this lawsuit has been public since Sept. If you read it, you come to the obvious conclusion that Philidor was being aggressive with CA licensing issue and that it is unclear if VRX knew or didn't know about this. However, that doesn't really move a stock, claiming accounting issues (channel stuffing) with a roll-up...that's another story. I am not sure if sharing that folder will work, so here are the two main documents in the suit. https://www.dropbox.com/s/rfh7z1kf39ckz4z/8.pdf?dl=0 https://www.dropbox.com/s/kzru224ctlmw7yl/12.pdf?dl=0 Link to comment Share on other sites More sharing options...
giofranchi Posted October 24, 2015 Author Share Posted October 24, 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 Also I think your way of valuing VRX on a balance sheet basis is not correct. Of course I think the businesses they have bought are much more valuable now because of: 1) Fat cut to the bone, 2) Better and much larger sales channels, 3) A better focus on marketing, 4) The good use of synergies, 5) A much lower tax rate. But you simply cannot take all the capital they have deployed, estimate how much the businesses they have purchased are truly worth now, take out all the debt, and arrive at a FV for VRX... Because that completely misses future opportunities. And I guess the first idea all longs have is they have invested in VRX because of Pearson's ability to find good investment opportunities in the healthcare sector!... Your balance sheet valuation would be like valuing VRX based only on its future organic growth, while we longs believe organic growth is good and necessary, but most of the value will still come from new acquisitions in the future. Cash EPS is the best metric to value VRX: look for which cash EPS multiple other pharma companies with the same rate of growth are selling for, and adjust that multiple for the heavier debt load VRX has right now. I have still to see a better valuation model! Cheers, Gio Link to comment Share on other sites More sharing options...
AzCactus Posted October 24, 2015 Share Posted October 24, 2015 Gio--care to share with us a rough breakdown of your portfolio and the qualities you look for in the stocks you buy. Your comments seem very astute, and we'll crafted. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 24, 2015 Share Posted October 24, 2015 I have updated my theory slightly: 1. An analyst on Bloomberg said there were no legal restrictions on a manufacturer owning a pharmacy. I assume this isn't common because pharmacies and distributors are low margin businesses. Wall street doesn't like to mix low margin with high margin. If you recall, Merck used to own Medco but spun it off. 2. The bear theory that Philidor is a boiler room doesn't fit the facts. Philidor needs prescriptions from doctors. This is audited by the insurance companies. The only way this theory works is if you assume that Philidor is counterfeiting prescriptions. 3. Seems like Reitz was trying to extort Philidor. He had evidence that they were shipping drugs to California without a license. He was hoping that Philidor would rather let him keep the reimbursement cheques than litigate. 4. As mentioned, the accounting fraud theory doesn't fit the facts. We know Reitz has a drawerful of cheques. There is another fraud possibility. Philidor might be faking the prescriptions which I assumed were being shipped illegally into California. I think this is low probablity given the audit requirements. But regardless, that would be a Philidor fraud not a Valeant fraud. For all those people trusting Citron's record, how many of those frauds did he uncover? Or did he just piggyback on the work of other shorts (like he is here)? Seems like he gets the attention because he is most sensational, not because his talented. Link to comment Share on other sites More sharing options...
original mungerville Posted October 24, 2015 Share Posted October 24, 2015 KCLarkin, I agree with all these points as a likely scenario. Re #3, I agree, unless you are a little crazy, you don't go around withholding tens of millions unless you have an angle (eg, Philidor doing something inappropriate in CA). Some there is probably something there. In any case, Valeant does not legally control Philidor and Philidor does not legally control R&O and my point is this lawsuit actually DEMONSTRATES that phenomenon despite these two entities potentially (we know Philidor is, not sure about R&O) being consolidated by Valeant as VIEs. (I think Citron and a guy named block did some decent work on Chinese small caps at some point but who knows with these guys, they may have teamed up with big hedgies and market markets, as in Overstock and FFH 10 years ago, to create unlimited amounts of digital shares to drive them into bankruptcy - ie naked short selling. I believe there are more restrictions on this now, but understand it may still be possible) Re #1, if you can find/remember the interview link with the analyst on Bloomberg I would really really appreciate it. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 24, 2015 Share Posted October 24, 2015 I don't have a link to the Bloomberg video. I just saw it on the Apple TV. It is interesting though. The one analyst with a sell rating said the stock had already blown through his price target. The one bear claim I have seen that I haven't addressed: the fake R&O website. I thought it was blatantly obvious that Philidor built that page because they are legally required to post a privacy policy. The other page belongs to R&O, which they were trying to purchase. Link to comment Share on other sites More sharing options...
TonyG Posted October 24, 2015 Share Posted October 24, 2015 http://www.bloomberg.com/news/videos/2015-10-23/digging-into-valeant-are-we-seeing-phantom-revenue- that the link? Link to comment Share on other sites More sharing options...
KCLarkin Posted October 24, 2015 Share Posted October 24, 2015 No, that is the Evercore interview. But the veritas interview was on that page. Here it is: http://www.bloomberg.com/news/videos/2015-10-23/valeant-under-scrutiny-veritas-searches-for-truth Link to comment Share on other sites More sharing options...
walt373 Posted October 24, 2015 Share Posted October 24, 2015 The fact that valeant went to lengths to hide their relationship with philador should give you pause. Why would they need to hide it if there was nothing going on worth hiding? Even if it turns out relatively benign, its too simplistic to write it off as a one off situation. Cockroach theory magnifies the significance of anything even slightly curious/unusual, and valeant has had more than a few pop up. A single suspicious item might be safely ignoreable but when you start getting clusters of hard-to-answer questions, the chance they are all nothing rapidly diminishes. Even bulls have to concede risk has definitely not gone down. It would be a stretch to say risk has stayed flat too, leaving only one direction - up. You're being paid to assume more risk. Historically, when clusters of red flags popped up and shorts started publishing reports, has it paid to go long? I doubt it. What i can tell you is that this pattern of events has preceded almost every fraud ever. Fraud risk increases the chance for a zero and that totally changes the risk-reward, meaning smaller position sizing for every prudent fund. Just doesn't make sense for vrx to be 30%+ of a portfolio anymore (if it ever did). Everyone can be wrong sometimes. 50% of a portfolio going to zero ends careers. Is it worth it? You might say all the supposed red flags are nothing more than the work of shorts drawing attention to mundane and unimportant quirks with valeant. But think about why shorts would choose valeant as a target. If they wanted to manipulate a stock, short and distort for an easy buck, why wouldn't they choose a less liquid stock with a more gullible investor base? Instead they attacked one of the most liquid and prominent stocks in the world with an all star cast of investors. Hard to actually find a stock with a more who's who of smart money. And the shorts WON. Because some of the vrx investing heroes have agreed with the shorts by selling. Might be wise to not so easily dismiss shorts as fools and liars. Link to comment Share on other sites More sharing options...
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