cmlber Posted October 22, 2015 Share Posted October 22, 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. Every great investor makes mistakes, so pointing out individual mistakes is irrelevant. Can you point to many other times when MANY of them made the same, HUGE mistake? Disclaimer: I haven't followed this drama closely, I just find it hard to believe so many funds with such large bets were so wrong based on one short seller pointing to two matching phone numbers and saying "smoking gun!" in big red letters. Link to comment Share on other sites More sharing options...
Liberty Posted October 22, 2015 Share Posted October 22, 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. Link to comment Share on other sites More sharing options...
scorpioncapital Posted October 22, 2015 Share Posted October 22, 2015 How do you get $1.7 billion of cash flow in run off? I used Google Finance - 2014 cash flow of 2.3 billion minus stock options - ~500m capex. Between 1.6 and 1.8 billion depending how you look at it. Link to comment Share on other sites More sharing options...
Picasso Posted October 22, 2015 Share Posted October 22, 2015 Why would you use 2014 cash flow, versus 2015 cash flow or even 2016 estimates without restructuring costs? This requires more work than pulling up old numbers from Google finance. Link to comment Share on other sites More sharing options...
dbuch Posted October 22, 2015 Share Posted October 22, 2015 Operating cash flow is expected to be $5-$5.5B next year with about $400M in CapEx so FCF should be about $4.5-$5B next year. With 350M shares that's $13 a share in FCF or 7x at $100/share. Operating cash flow is much more difficult to manipulate than Revenues or income. If they are stuffing the channel revenue will be higher and net income may be higher but it shouldn't have any impact on cash flow. It's possible they are delaying payment to vendors or factoring receivables to pull forward cash but I haven't seen anything about that. They do have $31B in debt but against $5B in forward FCF and $7-$8B in EBITDA so they are about 4x levered. Aggressive but not aggregious if they plan to paydown. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted October 22, 2015 Share Posted October 22, 2015 Link to comment Share on other sites More sharing options...
Sionnach Posted October 22, 2015 Share Posted October 22, 2015 Citron's Andrew left on Bloomberg TV now. should be interesting... Link to comment Share on other sites More sharing options...
LuigiHamilton Posted October 22, 2015 Share Posted October 22, 2015 Hey guys, Just joined the forum after long-term lurking to learn from you. I am just a “kid” but this story is pretty entertaining for outsiders. Have no interest in either side(can provide proof through mods if you think I’m a shill). Two quick questions: -Doesn’t it seem more likely that someone at Philidor is defrauding Valeant, given that there are supposedly 2 R&O’s according to Hempton? It just doesn’t seem to make sense if Valeant owns Philidor and Philidor owns R&O for the lawsuit against Valeant. -As far as I recall, Ackman got in on Valeant when Allergan takeover came about, in which he made tons of money of the call options on Allergan. I think he also had to keep long term calls on Valeant as part of the deal, so maybe is in VRX for more than just the fundamentals? Sorry if these questions seem ignorant, but just thought it would a good time to start posting on the forum as this is pretty interesting. Link to comment Share on other sites More sharing options...
rpadebet Posted October 22, 2015 Share Posted October 22, 2015 Operating cash flow is expected to be $5-$5.5B next year with about $400M in CapEx so FCF should be about $4.5-$5B next year. With 350M shares that's $13 a share in FCF or 7x at $100/share. Operating cash flow is much more difficult to manipulate than Revenues or income. If they are stuffing the channel revenue will be higher and net income may be higher but it shouldn't have any impact on cash flow. It's possible they are delaying payment to vendors or factoring receivables to pull forward cash but I haven't seen anything about that. They do have $31B in debt but against $5B in forward FCF and $7-$8B in EBITDA so they are about 4x levered. Aggressive but not aggregious if they plan to paydown. 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) Link to comment Share on other sites More sharing options...
sleepydragon Posted October 22, 2015 Share Posted October 22, 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. Link to comment Share on other sites More sharing options...
Guest wellmont Posted October 22, 2015 Share Posted October 22, 2015 it was a hedge fund that called cnbc and said they no longer are a holder. RC does not call CNBC and tell them anything. if i had to guess i would guess paulson. Link to comment Share on other sites More sharing options...
Liberty Posted October 22, 2015 Share Posted October 22, 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 Link to comment Share on other sites More sharing options...
Picasso Posted October 22, 2015 Share Posted October 22, 2015 -As far as I recall, Ackman got in on Valeant when Allergan takeover came about, in which he made tons of money of the call options on Allergan. I think he also had to keep long term calls on Valeant as part of the deal, so maybe is in VRX for more than just the fundamentals? He only recieved cash and ACT stock (now AGN) as part of the AGN holding. He then basically rolled it all into VRX when he was legally able to. He wouldn't have bought VRX if it wasn't fundamentally justified, notwithstanding his recent purchase. Link to comment Share on other sites More sharing options...
Picasso Posted October 22, 2015 Share Posted October 22, 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. These guys get run over by shorts all the time. It doesn't always have a great effect on the market, but sometimes due to different market dynamics you can see an exaggerated shift in the stock price. In this case you have 1) almost unanimous buys by the sell side, 2) massive concentration on funds down 15%+ YTD, 3) a vilified business mode, 4) lots of debt, 5) low short interest, 6) limited ability for the company to repurchase stock, 7) the company being effectively locked out of the capital markets, and 8) the potential for different investigations (sec, tax, audits, congress, etc.) I'm sure I missed something, but that's a nasty recipe when combined with people yelling Enron in a crowded theater. Andrew Left knows he doesn't have to prove anything. He can just point to something that looks strange and create this kind of turbulence because of those market dynamics. Like you said, his interview didn't highlight anything useful. Link to comment Share on other sites More sharing options...
flesh Posted October 22, 2015 Share Posted October 22, 2015 Anyone know when vrx can resume buybacks? When does the blackout period end? Thanks. Link to comment Share on other sites More sharing options...
ourkid8 Posted October 22, 2015 Share Posted October 22, 2015 Speaking on behalf of Flesh, why are they not able to do both? They do not need to repurchase shares aggressively however the statement/optics that they are repurchasing would reassure investors their business is sound and the stock is a HUGE bargain. The icing on the cake would be if management also started adding to their position on the open market. That would show confidence in the business and that it is NOT a fraud. flesh, if you were a board member, and assuming you had not heard the name philidor until a week ago, would you push to repurchase stock now? would you check your D&O policy first? Link to comment Share on other sites More sharing options...
Liberty Posted October 22, 2015 Share Posted October 22, 2015 http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-Pharmaceuticals-To-Hold-Investor-Conference-Call-On-October-26-2015/default.aspx Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) today announced that it will host a conference call and a live webcast along with a slide presentation on Monday, October 26, 2015 at 8:00 a.m. ET (5:00 a.m. PT). The purpose of the call will be to lay out the facts including allegations made against our company regarding our relationship with Philidor and R&O, our accounting practices, and channel stuffing that contain numerous errors, unsupported speculation and incorrect interpretations of facts and circumstances to the detriment of the shareholders of the Company. Participants on the call will include: Norma Provencio, Board Member, Chairman Audit and Risk Committee Theo Melas-Kyriazi, Board Member, Member Audit and Risk Committee Katharine Stevenson, Board Member, Member Audit and Risk Committee Howard Schiller, Board Member, former Chief Financial Officer Robert Hale, Board Member, Partner of ValueAct Capital J. Michael Pearson, Chairman and Chief Executive Officer Robert Chai-Onn, General Counsel Robert Rosiello, Chief Financial Officer Tanya Carro, Corporate Controller Ari Kellen, Company Group Chairman "We look forward to our call on Monday where we will address and refute recent allegations," stated J. Michael Pearson, chairman and chief executive officer. stated J. Michael Pearson, chairman and chief executive officer. The dial-in number to participate on this call is (877) 876-8393, confirmation code 67537440. International callers should dial (973) 200-3961, confirmation code 67537440. A replay will be available approximately two hours following the conclusion of the conference call to November 2, 2015, and can be accessed by dialing (855) 859-2056 or (404) 537-3406, confirmation code 67537440. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 22, 2015 Share Posted October 22, 2015 From WSJ: Some investors sought to profit from the stock fall. Glenn Greenberg of Brave Warrior Advisors LLC said it bought more Valeant shares Wednesday and now owns more than 6 million, or nearly 2%. Link to comment Share on other sites More sharing options...
Picasso 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. Link to comment Share on other sites More sharing options...
kab60 Posted October 22, 2015 Share Posted October 22, 2015 From WSJ: Some investors sought to profit from the stock fall. Glenn Greenberg of Brave Warrior Advisors LLC said it bought more Valeant shares Wednesday and now owns more than 6 million, or nearly 2%. That is pretty ballsy. I thought of him when Cimpress dropped a lot yesterday. Link to comment Share on other sites More sharing options...
merkhet Posted October 22, 2015 Share Posted October 22, 2015 From WSJ: Some investors sought to profit from the stock fall. Glenn Greenberg of Brave Warrior Advisors LLC said it bought more Valeant shares Wednesday and now owns more than 6 million, or nearly 2%. That is pretty ballsy. I thought of him when Cimpress dropped a lot yesterday. They owned 5.7 million prior to the drop. Link to comment Share on other sites More sharing options...
stahleyp Posted October 22, 2015 Share Posted October 22, 2015 Does anyone know a time that pretty skilled investors have been wrong and the market was right about a fraudulent company? Sequoia, Greenberg, Iridian, Freeman, Ackman, Mandel are all in it. When we think of big frauds like Enron and Worldcom, I don't recall several good investors in those. Paulson did get caught with Sino-Forest but I consider him a top investor. Link to comment Share on other sites More sharing options...
Liberty Posted October 22, 2015 Share Posted October 22, 2015 FWIW, some tweets from someone who knows Pearson from McKinsey (Nikolai Kondratiev, @NKondratiev): @given2tweet I knew Mike Pearson at McKinsey and one thing he is not is a criminal or someone who will skirts edges of legality. One thing Mike Pearson is not is unethical or criminal. Making comparison between him and Jeff Skilling is outright slander. $VRX @given2tweet Hyperbole. The existence of an intermediary can be true but doesn't mean it is being used for channel stuffing. @given2tweet I don't know $VRX well enough. I do know Mike Pearson is a compassionate & ethical manager, & unlikely to play in gray areas. Comparing $VRX to Enron is one way to willfully press the button "sell first, ask questions later" instinct of institutional money managers. What really did it for $VRX was Citron comparing it to Enron. A reference most will not get (too young), but all we need now is Dick Foster to extol the virtues of $VRX's creative destruction.... @PlanMaestro I believe Pearson is good, ethical man so am of view if there are issues, they're limited in scope & not result of a 'scheme'. @PlanMaestro I just think as a character study, he's no Jeff Skilling. One shouldn't underestimate the impact Skilling had on us all then. @PlanMaestro I know & like the man & wish he'd stop wearing blue shirts with white collars. Link to comment Share on other sites More sharing options...
merkhet Posted October 22, 2015 Share Posted October 22, 2015 Dick Foster, mentioned above, was one of my professors. (One of my favorites, actually.) He also knew Pearson well from his days at McKinsey and had great things to say. However, I still remember him telling us that he was asked to sit on the Enron board, and, there but for the grace of God, passed because he was too busy. So, that's a countervailing point. (Yes, it's unfortunate that this is another random comparison to Enron but those are the two stories that he told about guys he knew well that left McKinsey to run big companies.) Link to comment Share on other sites More sharing options...
kab60 Posted October 22, 2015 Share Posted October 22, 2015 From WSJ: Some investors sought to profit from the stock fall. Glenn Greenberg of Brave Warrior Advisors LLC said it bought more Valeant shares Wednesday and now owns more than 6 million, or nearly 2%. That is pretty ballsy. I thought of him when Cimpress dropped a lot yesterday. They owned 5.7 million prior to the drop. Which I think was ballsy enough by itself. :) Link to comment Share on other sites More sharing options...
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