Mephistopheles Posted October 21, 2015 Share Posted October 21, 2015 I just have deep distaste for VRX business model, they don't believe in R&D, just buy cheap dugs and jack up the prices. There will be lot of bad news for this puppy, I don't care if Ackman bought in, he is just trying to save his face. I will be a buyer if Klarman or Buffett will buy ! So you won't buy because you have a deep distate for their model, and because they don't believe in R&D. But if Buffett buys than all that thinking gets thrown out the window? Link to comment Share on other sites More sharing options...
Picasso Posted October 21, 2015 Share Posted October 21, 2015 I just have deep distaste for VRX business model, they don't believe in R&D, just buy cheap dugs and jack up the prices. There will be lot of bad news for this puppy, I don't care if Ackman bought in, he is just trying to save his face. I will be a buyer if Klarman or Buffett will buy ! That's also not really true. There is R&D and it's not all buy cheap drugs and jack up prices. Link to comment Share on other sites More sharing options...
original mungerville Posted October 21, 2015 Share Posted October 21, 2015 Wouldn't this have been the perfect opportunity to announce on the press release you are aggressively repurchasing stock at the current price? Not sure they are permitted to right now - just after earnings release. Typical timing for bear raids. Get the maximum drop out of the stock price. Anyway, I would like them to focus on debt repayment. Well what money are they gonna buy the stock back with? Also looks like the bond market may be closed to them for a while. Agreed on bond markets. There doesn't have to be fraud for this to go to zero. The stock was overpriced based on a misleading metric. If it is repriced based on real FCF, then this is a $10b-$15b EV company. With $28b in net debt and no means of refinancing at the same rates, you have a problem. VRX lost value with paying full price for businesses that didn't perform that well. ?? First, you don't need to refinance at the same rates. Second, they are probably going to have $20-25B in EBITDA come in over the next three years (starting with over $7.5 billion in 2016). Anyhoo. Link to comment Share on other sites More sharing options...
luck Posted October 21, 2015 Share Posted October 21, 2015 cogitator, the guy who buffett once said was the best investor on the planet, lou simpson (previously with berkshire), had around 12% of his fund in valeant as of last q. with valeant, probably best not to rely much on 13F's given the complexity. Link to comment Share on other sites More sharing options...
original mungerville Posted October 21, 2015 Share Posted October 21, 2015 schwab, here's some info on andrew left, the guy behind today's citron report: In 1998, Left was found by the National Futures Association to have “made false and misleading statements to cheat, defraud or deceive a customer", and disbarred for three years.[43] In 2002, his then employer Detour Media sued Left for "fraud and deceit, negligent misrepresentation, breach of fiduciary duty and unlawful monetary conversion".[44] He was ordered to pay $26,445.62 compensation.[45] In 2010, Left was briefly arrested in Florida. The market bet today on Left, Hempton, AZ Value, Roddy Boyd, WSJ and Fortune reporters some of which may have dealt with these guys over time. Now for the short-covering. Link to comment Share on other sites More sharing options...
Liberty Posted October 21, 2015 Share Posted October 21, 2015 New strong statement from the company: Link to comment Share on other sites More sharing options...
LongHaul Posted October 21, 2015 Share Posted October 21, 2015 I would love to own VRX for $50 or less with no debt ! In Valeant's case their debt will be their biggest enemy ! Time will tell but at this point it is a falling knife. What is helpful is to see these things unfold, make notes and periodically read those notes to keep one grounded. Cogitator - what is your take on the business model of VRX long term? Would be great to hear from a doctor. Link to comment Share on other sites More sharing options...
cogitator8 Posted October 21, 2015 Share Posted October 21, 2015 I hardly prescribe any drug made by Valeant, my comment about Buffett buying it was intended as sarcasm, as he will never buy a company which jack up the prices of simple, cheap drugs by acquiring the parent company. To me it is certainly not a business model which is going to last. I think everybody knows about J&J and what they make. That is the business model I like. So when tylenol/cyanide incident first hit the news many years ago they handled it so well and Tylenol is still in the market. So one must look for indestructible moat, after many years of learning and trying, that is the conclusion I reached to. Link to comment Share on other sites More sharing options...
cogitator8 Posted October 21, 2015 Share Posted October 21, 2015 Also understand that Ruane,Cunif and Goldfarb bought this stock in its 50's, so price is what you and value is what you get ! And if you go back and look at VRX debt level, they didn't have $30B of debt. That is where I have serious issue with the Sanity of Pearson. He certainly is not Singleton, and VRX is not Teledyne ! Again this is just my humble opinion. There are lot of other Hidden Champion type of companies in this world, which are waiting to be discovered. VRX is NOT a Hidden Champion. Link to comment Share on other sites More sharing options...
cogitator8 Posted October 21, 2015 Share Posted October 21, 2015 I also cite this wonderful book by Hermann Simon" Hidden Champions of 21 Century" to further understand the business model I use to buy great companies. BTW VRX is not listed in this book. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 21, 2015 Share Posted October 21, 2015 Wouldn't this have been the perfect opportunity to announce on the press release you are aggressively repurchasing stock at the current price? Not sure they are permitted to right now - just after earnings release. Typical timing for bear raids. Get the maximum drop out of the stock price. Anyway, I would like them to focus on debt repayment. Well what money are they gonna buy the stock back with? Also looks like the bond market may be closed to them for a while. Agreed on bond markets. There doesn't have to be fraud for this to go to zero. The stock was overpriced based on a misleading metric. If it is repriced based on real FCF, then this is a $10b-$15b EV company. With $28b in net debt and no means of refinancing at the same rates, you have a problem. VRX lost value with paying full price for businesses that didn't perform that well. ?? First, you don't need to refinance at the same rates. Second, they are probably going to have $20-25B in EBITDA come in over the next three years (starting with over $7.5 billion in 2016). Anyhoo. I think if you create a treasury schedule you'll see what I mean. Interest expense has been 35%-40% of aggregate EBTIDA since 2008. If you increase that by 50%, you have a problem. 50% increase is not arbitrary. It reflects current bond prices. If they can't raise drug prices then VRX would have been -3% to 3% "organic growth" in 2014 and YTD 2015. I'm not fear mongering. I've never shorted a stock in my life nor have I ever written a sell report before VRX. I have no position in VRX (sadly) and I'm just reporting facts that I've found. I pointed out the $2.1b peak sales for IBS-D so it's not like I'm ignoring positive facts I find. Link to comment Share on other sites More sharing options...
Picasso Posted October 21, 2015 Share Posted October 21, 2015 Funny to see the number of people clicking yes or unsure to the fraud poll increase in the past couple days. Amazing to see such a visceral reaction in the stock price to a short "smoking gun" and no reaction to sell side reports. It's like people suddenly woke up and realized they had no idea why they owned this thing. And then suddenly this... ... a comparison to Enron. It's like the anti-Oprah catalyst. I thought Herbalife was entertaining but this takes the cake. Lots of collateral damage across other hedge fund hotels as well. IBKR, CHTR, AGN, etc. CXRX is trading for what, 3x cash EPS? And now short sellers are thinking Valeant is doing the same channel stuffing that Salix got into trouble. What a turn of events, sheesh. Link to comment Share on other sites More sharing options...
100 Shares Posted October 21, 2015 Share Posted October 21, 2015 Wouldn't this have been the perfect opportunity to announce on the press release you are aggressively repurchasing stock at the current price? Not sure they are permitted to right now - just after earnings release. Typical timing for bear raids. Get the maximum drop out of the stock price. Anyway, I would like them to focus on debt repayment. Well what money are they gonna buy the stock back with? Also looks like the bond market may be closed to them for a while. Agreed on bond markets. There doesn't have to be fraud for this to go to zero. The stock was overpriced based on a misleading metric. If it is repriced based on real FCF, then this is a $10b-$15b EV company. With $28b in net debt and no means of refinancing at the same rates, you have a problem. VRX lost value with paying full price for businesses that didn't perform that well. ?? First, you don't need to refinance at the same rates. Second, they are probably going to have $20-25B in EBITDA come in over the next three years (starting with over $7.5 billion in 2016). Anyhoo. I think if you create a treasury schedule you'll see what I mean. Interest expense has been 35%-40% of aggregate EBTIDA since 2008. If you increase that by 50%, you have a problem. 50% increase is not arbitrary. It reflects current bond prices. If they can't raise drug prices then VRX would have been -3% to 3% "organic growth" in 2014 and YTD 2015. I'm not fear mongering. I've never shorted a stock in my life nor have I ever written a sell report before VRX. I have no position in VRX (sadly) and I'm just reporting facts that I've found. I pointed out the $2.1b peak sales for IBS-D so it's not like I'm ignoring positive facts I find. Where are you getting -3 to 3% organic growth from? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 21, 2015 Share Posted October 21, 2015 Wouldn't this have been the perfect opportunity to announce on the press release you are aggressively repurchasing stock at the current price? Not sure they are permitted to right now - just after earnings release. Typical timing for bear raids. Get the maximum drop out of the stock price. Anyway, I would like them to focus on debt repayment. Well what money are they gonna buy the stock back with? Also looks like the bond market may be closed to them for a while. Agreed on bond markets. There doesn't have to be fraud for this to go to zero. The stock was overpriced based on a misleading metric. If it is repriced based on real FCF, then this is a $10b-$15b EV company. With $28b in net debt and no means of refinancing at the same rates, you have a problem. VRX lost value with paying full price for businesses that didn't perform that well. ?? First, you don't need to refinance at the same rates. Second, they are probably going to have $20-25B in EBITDA come in over the next three years (starting with over $7.5 billion in 2016). Anyhoo. I think if you create a treasury schedule you'll see what I mean. Interest expense has been 35%-40% of aggregate EBTIDA since 2008. If you increase that by 50%, you have a problem. 50% increase is not arbitrary. It reflects current bond prices. If they can't raise drug prices then VRX would have been -3% to 3% "organic growth" in 2014 and YTD 2015. I'm not fear mongering. I've never shorted a stock in my life nor have I ever written a sell report before VRX. I have no position in VRX (sadly) and I'm just reporting facts that I've found. I pointed out the $2.1b peak sales for IBS-D so it's not like I'm ignoring positive facts I find. Where are you getting -3 to 3% organic growth from? 3Q15 press release. I removed the growth due to price increases for US branded pharmaceuticals and used actual results for international revenue (not adjusted for currency). Link to comment Share on other sites More sharing options...
Graham Osborn Posted October 21, 2015 Share Posted October 21, 2015 This is probably water under the bridge for VRX at this point, but has anyone come across a way for retail investors to either buy or synthesize CDS? The closest thing I could find was CEBOs which are only offered for indices and supposedly certain stocks as well (kudos to whoever bozo at CBOE produced that list). Anyway, appreciate any ideas. Link to comment Share on other sites More sharing options...
100 Shares Posted October 21, 2015 Share Posted October 21, 2015 Wouldn't this have been the perfect opportunity to announce on the press release you are aggressively repurchasing stock at the current price? Not sure they are permitted to right now - just after earnings release. Typical timing for bear raids. Get the maximum drop out of the stock price. Anyway, I would like them to focus on debt repayment. Well what money are they gonna buy the stock back with? Also looks like the bond market may be closed to them for a while. Agreed on bond markets. There doesn't have to be fraud for this to go to zero. The stock was overpriced based on a misleading metric. If it is repriced based on real FCF, then this is a $10b-$15b EV company. With $28b in net debt and no means of refinancing at the same rates, you have a problem. VRX lost value with paying full price for businesses that didn't perform that well. ?? First, you don't need to refinance at the same rates. Second, they are probably going to have $20-25B in EBITDA come in over the next three years (starting with over $7.5 billion in 2016). Anyhoo. I think if you create a treasury schedule you'll see what I mean. Interest expense has been 35%-40% of aggregate EBTIDA since 2008. If you increase that by 50%, you have a problem. 50% increase is not arbitrary. It reflects current bond prices. If they can't raise drug prices then VRX would have been -3% to 3% "organic growth" in 2014 and YTD 2015. I'm not fear mongering. I've never shorted a stock in my life nor have I ever written a sell report before VRX. I have no position in VRX (sadly) and I'm just reporting facts that I've found. I pointed out the $2.1b peak sales for IBS-D so it's not like I'm ignoring positive facts I find. Where are you getting -3 to 3% organic growth from? 3Q15 press release. I removed the growth due to price increases for US branded pharmaceuticals and used actual results for international revenue (not adjusted for currency). I see. If you have three factors for year over year comparison: currency fluctuations, volume and price increases/decreases. I guess it depends on what you consider "organic growth", but if you are trying to back calculate volume growth, I would think that you would want to not ignore currency fluctuations. Thoughts? Link to comment Share on other sites More sharing options...
original mungerville Posted October 21, 2015 Share Posted October 21, 2015 My thought is that this is certainly original Schwab analysis - not found anywhere else, that's for sure because no analyst has picked up on it. It means it could be very good or very bad. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 21, 2015 Share Posted October 21, 2015 I only provide the range because I don't have my notes in front of me and I'm trying to be safe. As mentioned, VRX already provides correctly calculated organic growth. My intention was to see what actual growth would have looked like without price increases (this is obviously the other extreme - they should still be able to realize some price growth moving forward). It's worth noting that if you use VRX's organic growth figures for EM revenue then you are implicitly forecasting that EM currencies will be flat against the dollar moving forward. Almost no one is expecting that to be the case (I don't like to make macro calls but I'm trying to be realistic - with a snapshot you can only view how far away VRX is with multiple angles). VRX will benefit when the USD actually does appreciate against these currencies. My thought is that this is certainly original Schwab analysis - not found anywhere else, that's for sure because no analyst has picked up on it. It means it could be very good or very bad. Haha agreed. To remind new readers, I once claimed non-durable rev was 90% when I forgot to fully update my spreadsheet. On my end, sometimes I'm just testing theories against scrutiny and other times I'm presenting well-developed ideas. OM provides a good reminder to do your own DD and validate all claims. Link to comment Share on other sites More sharing options...
original mungerville Posted October 21, 2015 Share Posted October 21, 2015 I only provide the range because I don't have my notes in front of me and I'm trying to be safe. As mentioned, VRX already provides correctly calculated organic growth. My intention was to see what actual growth would have looked like without price increases (this is obviously the other extreme - they should still be able to realize some price growth moving forward). It's worth noting that if you use VRX's organic growth figures for EM revenue then you are implicitly forecasting that EM currencies will be flat against the dollar moving forward. Almost no one is expecting that to be the case (I don't like to make macro calls but I'm trying to be realistic - with a snapshot you can only view how far away VRX is with multiple angles). VRX will benefit when the USD actually does appreciate against these currencies. My thought is that this is certainly original Schwab analysis - not found anywhere else, that's for sure because no analyst has picked up on it. It means it could be very good or very bad. Haha agreed. To remind new readers, I once claimed non-durable rev was 90% when I forgot to fully update my spreadsheet. On my end, sometimes I'm just testing theories against scrutiny and other times I'm presenting well-developed ideas. OM provides a good reminder to do your own DD and validate all claims. You wrongly claimed a lot more than that in my view - but hey you are on this board so in terms of what and why you post, I guess its up to you. Link to comment Share on other sites More sharing options...
lessthaniv Posted October 21, 2015 Share Posted October 21, 2015 Andrew Left of Citron Research convicted of fraud and barred from association with the National Futures Association ANDREW LEFT - THE PANEL FOUND THAT LEFT MADE FALSE AND MISLEADING STATEMENTS TO CHEAT, DEFRAUD OR DECEIVE A CUSTOMER IN VIOLATION OF NFA COMPLIANCE RULES 2-2(a) AND 2-29(a)(1). LEFT'S CONDUCT WAS INCONSISTENT WITH JUST AND EQUITABLE PRINCIPLES OF TRADE. CONSEQUENTLY, THE PANEL BARRED LEFT FROM ASSOCIATION WITH AND FROM ACTING AS A PRINCIPAL OF ANY NFA MEMBER FOR THREE YEARS; ORDERED HIM TO TAKE AN ETHICS TRAINING COURSE; AND PLACED RESTRICTIONS ON HIS ACTIVITIES FOR TWO YEARS WHICH PREVENT HIM FROM SUPERVISING ANY AP AND REQUIRE HIM TO TAPE RECORD AND LOG ALL CONVERSATIONS WITH CURRENT AND POTENTIAL CUSTOMERS. Link here: http://www.nfa.futures.org/BasicNet/Case.aspx?entityid=0244735&case=95BCC00020&contrib=NFA Probably wishing it was a lifetime ban .... Will be taking a look VRX here as these guys have a history of bear raids. Link to comment Share on other sites More sharing options...
original mungerville Posted October 21, 2015 Share Posted October 21, 2015 More good Citron "research": The Many Similarities of Fairfax Financial (FFH) to Enron. http://www.citronresearch.com/stocklemon-updates-fairfax-financial-ffh/ Link to comment Share on other sites More sharing options...
original mungerville Posted October 21, 2015 Share Posted October 21, 2015 Double cashing checks multiple times... http://web.archive.org/web/20130314011000/http://www.citronfraud.com/wp-content/uploads/2012/09/case1.pdf Link to comment Share on other sites More sharing options...
Hielko Posted October 21, 2015 Share Posted October 21, 2015 More good Citron "research": The Many Similarities of Fairfax Financial (FFH) to Enron. http://www.citronresearch.com/stocklemon-updates-fairfax-financial-ffh/ Cheap attack on the messenger instead of the message. So what that Citron didn't get 100% of their calls right. When you are a long-only investor you get zero comments when you get 40% wrong and 60% right. When you are a short seller you are suddenly supposed to hit a 100% hit ratio? Afaik Citron "picks" have performed something like -26% versus the S&P on average... Link to comment Share on other sites More sharing options...
original mungerville Posted October 22, 2015 Share Posted October 22, 2015 More good Citron "research": The Many Similarities of Fairfax Financial (FFH) to Enron. http://www.citronresearch.com/stocklemon-updates-fairfax-financial-ffh/ Cheap attack on the messenger instead of the message. So what that Citron didn't get 100% of their calls right. When you are a long-only investor you get zero comments when you get 40% wrong and 60% right. When you are a short seller you are suddenly supposed to hit a 100% hit ratio? Afaik Citron "picks" have performed something like -26% versus the S&P on average... Cheap post Hielko. The Citron message says Valeant inflated revenues but that's not even possible when these entities are consolidated under accounting rules (because any transactions are eliminated upon consolidation). Link to comment Share on other sites More sharing options...
lessthaniv Posted October 22, 2015 Share Posted October 22, 2015 http://www.cnbc.com/2015/10/21/valeant-halted-in-heavy-trading-down-28-after-citron-research-report.html Ackman adds shares. Strangely familiar to Herbalife, no. The cynical side of me silently wonders if the true business model is to play both sides of the field. Make money on the fall, use the drop to aquire shares. Link to comment Share on other sites More sharing options...
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