VRX - Valeant Pharmaceuticals International Inc.

[LC]

Bill sounds so desperate in those emails.

 

I mean, holy crap Bill, if Valeant is worth its weight, what does Munger's opinion matter?

 

But, if Valeant isn't worth it's weight, and we're talking about a popularity contest and not a weighing machine...

[premfan]

Wow what a long winded email. Brevity is brilliance Bill! There is a difference in cutting cost of a burger chain vs a healthcare company. Humans need continued innovation in healthcare to improve quality of life. Let a 92 year old man enjoy his peanut brittle.

[Phaceliacapital]

" I believe Jorge Paolo personally became a shareholder of Valeant after I arranged for him to rreet Mike last year. We

own5.7% of the company. "

 

Curious if this is true?

[ZenaidaMacroura]

" I believe Jorge Paolo personally became a shareholder of Valeant after I arranged for him to rreet Mike last year. We

own5.7% of the company. "

 

Curious if this is true?

Probably not something he'd lie about given the people involved can easily verify...

 

Question is whether he still holds it.

[johnny]

Question is whether Jorge picks up the phone if Ackman ever calls him again on a new deal.

[Picasso]

Ackman is such a scummy guy. Buffett mentioned that large holders pitched the idea of jacking up prices as part of the attractiveness and then you see Ackman on the hill saying he had limited ways of knowing about the price hikes. Then trying to make it seem like Jorge was buying...

 

It was bad enough that Ackman was shoving VRX down investors throats, but he also kept pressing people to like Pearson & Co as well. It makes total sense to see Buffett take further aim at these clowns.

 

Munger is right in that all these investors and executives at Valeant are getting what they deserve. Ackman has really taken a torpedo to his career on this one.

[Mephistopheles]

If you read carefully in the email he says "I believe Jorge Paulo personally became a shareholder", so not exactly confirming it. But nevertheless idiotic to even bring it up that way hoping to bait the master into a meeting.

[fareastwarriors]

Valeant’s CEO Was Key Force on Pricing

 

Documents collected during a Senate investigation provide look at how Valeant arrived at sharp price increases

 

 

http://www.wsj.com/articles/valeants-ceo-was-key-force-on-pricing-1462148551

[dontdodebt]

All of this should give us really good information after it´s over. Is Ackman honest, if so, what are all the errors he have made?

 

I think we all could learn of this case, it has been really interesting to follow. I don´t think we should necessarly kill Ackman, we should learn from his error.

[DeepSouth]

Bill sounds so desperate in those emails.

 

I mean, holy crap Bill, if Valeant is worth its weight, what does Munger's opinion matter?

 

But, if Valeant isn't worth it's weight, and we're talking about a popularity contest and not a weighing machine...

 

It's reflexivity. For a company that relies very heavily on the capital markets to create value, the intrinsic value of the business is heavily dependent on the market's view of the value of the business.

[Mephistopheles]

Ackman was just on CNBC. Compared VRX to GS during the crisis, and then later to Saloman. And then last year he compared it to AXP during salad oil and of course KO.

 

Not to forget when he first invested he said it's like another Berkshire.

 

lol

[Graham Osborn]

Talk about desperation. If I was Charlie, I would have told Ackman to get stuffed.

 

http://www.valuewalk.com/wp-content/uploads/2016/05/Warren-Buffett-Charlie-Munger-Valeant-Emails-with-Bill-Ackman.png

 

http://www.valuewalk.com/wp-content/uploads/2016/05/ACKMANMUNGER0429.pdf

http://www.valuewalk.com/wp-content/uploads/2016/05/ackmanmunger20429.pdf

 

This is the thing that really gets me about Ackman.  They say Ackman is a gifted analyst, and I think there is evidence from the MBIA saga to substantiate that.  But I don't think he is spending his days analyzing companies.  He seems more interested in changing perceptions than examining reality.  He's become more propagandist than analyst, but the market is still bigger than he is.

 

Anyway, I guess this exchange came back to bite them in the rear on Saturday.  I got there late and didn't have time to get in the raffle for a question so I was glad someone else asked one relating to Valeant for me.  The question I was going to ask was:

 

"Mr. Munger, last year a comparison was made between the acquisition models of Berkshire and Valeant/ Allergan.  I was wondering if you can go over the differences."

 

In retrospect I'm kinda glad I didn't because it's kind of a leading question and there were already too many leading questions at the meeting.  Anyway, the question tying in Sequoia was more pertinent.

[Graham Osborn]

Let me clarify, there is still a ValueAct representative on the board.  Mason Morfit was brought in temporarily to be on the special committee investigating Philidor which is now complete.  They still have D. Robert Hale on the Board who will represent their investment. 

 

 

Valeant Said to Replace Up to Five Board Members This Week

http://www.bloomberg.com/news/articles/2016-04-28/valeant-said-to-replace-as-many-as-five-board-members-this-week

 

I'm surprised Mason Morfit may be replaced. Morfit is president of ValueAct.

probably a voluntary step down and gives valueact the chance to duck out of the position altogether...

 

You're right. Thanks for clearing this up.

 

If Valeant is the monster, ValueAct is probably Frankenstein.  The extended discussion on IC at GEICO in the Berkshire meeting was a good example of the right sort of incentives for LT performance.  Paying your CEO like a PE manager is quite the opposite.  It's funny the lengths you will go to to prop up the stock when you can become a billionaire in the process.  That's why I recommended last year that ValueAct be dumped from the board:

 

http://seekingalpha.com/article/3651406-prescription-valeant

 

As you may recall, the first major break in VRX's stock price occurred when ValueAct began to exit its stake, citing that the position had become too large relative to the portfolio.  Whether Ubben et al knew at the time of VRX's deeper problems is difficult to know, but since the problems were easy for anyone to identify (people just ignored them while the stock price kept rising) it would be hard to hold it against them if they did know.  As the saying goes, "what wise men do in the beginning fools do in the end," or "what ValueAct and Warburg do in the beginning, Ackman and Paulson do in the end" lol.

[Matson125]

Let me clarify, there is still a ValueAct representative on the board.  Mason Morfit was brought in temporarily to be on the special committee investigating Philidor which is now complete.  They still have D. Robert Hale on the Board who will represent their investment. 

 

 

Valeant Said to Replace Up to Five Board Members This Week

http://www.bloomberg.com/news/articles/2016-04-28/valeant-said-to-replace-as-many-as-five-board-members-this-week

 

I'm surprised Mason Morfit may be replaced. Morfit is president of ValueAct.

probably a voluntary step down and gives valueact the chance to duck out of the position altogether...

 

You're right. Thanks for clearing this up.

 

If Valeant is the monster, ValueAct is probably Frankenstein.  The extended discussion on IC at GEICO in the Berkshire meeting was a good example of the right sort of incentives for LT performance.  Paying your CEO like a PE manager is quite the opposite.  It's funny the lengths you will go to to prop up the stock when you can become a billionaire in the process.  That's why I recommended last year that ValueAct be dumped from the board:

 

http://seekingalpha.com/article/3651406-prescription-valeant

 

As you may recall, the first major break in VRX's stock price occurred when ValueAct began to exit its stake, citing that the position had become too large relative to the portfolio.  Whether Ubben et al knew at the time of VRX's deeper problems is difficult to know, but since the problems were easy for anyone to identify (people just ignored them while the stock price kept rising) it would be hard to hold it against them if they did know.  As the saying goes, "what wise men do in the beginning fools do in the end," or "what ValueAct and Warburg do in the beginning, Ackman and Paulson do in the end" lol.

 

+1

 

Ackman is doing Valueact a huge favour, IMO.  A Valueact Principal should have been at the Senate hearings instead of Ackman. 

[doughishere]

Yeah I thought Graham's comment before that was good also

[rb]

Oh give me a break! This is so much bullshit! There is enough bullshit to go around for everyone to get a giant helping.

 

First of all and I think this one takes the cake, is guys like Ackman who act all tough talking about being tough and wise and shrewd. Put this whole militaristic persona. (Remember when he threatened thermo-nuclear war on the Canadian-Pacific Board?). But in reality they're so thin skinned. They get all butthurt like a high school girl and start sending "ma he's looking at me funny emails" when a 90 year old dude gives a 15 second off the cuff remark at some obscure meeting only attended by value investing super geeks and not covered by anyone just cause he picked on his pretty boy.

 

Secondly, what happened? If all it would take for Buffett or Munger is to have one meeting with Pearson to see that he's such a great guy and manager and the second coming of Jesus, what actually happened? How could Ackman judge his bunk mate so wrong that he had to fire him now? Is he a moron?

 

Thirdly, the senate hearing... Let's call that burning bullshit superfest.

  1.Pearson didn't want to show up until he was threatened with a contempt of congress charge. Them he shows up doing the whole "Oh, me so sowey. I  didn't know me dramatically raising prices on life saving drugs is gonna affect people".

  2. Ackman being all contrite and not threatening thermo-nuclear war. Could this be because the US government actually has thermo-nuclear weapons?

  3. Ackman acting like he deserves a deep, long stroking cause he recommended (possibly will be implemented?) a 30% cut for only those 4 drugs? which means that the cheap drugs cardio drug whose price was raised by 500% now will only be 320% more expensive and the Wilson's drug that went from $700 co-pay to $26,000 co-pay now is at $18,200 co-pay? Gee, thanks, you're a prince!

  4. Ackman, mister I read a thousand gazillion documents in my research before I make an investment didn't know that Valeant (my largest investment) raises prices substantially post acquisition. Well I know a number of people on a value investing super geek board that figured that out without the resources of a muti-billion dollar hedge fund. Maybe we should get him a subscription to increase his research capability. That testimony is either perjury or he should be sued for gross negligence - now we also have buffet that said that he's been pitched on Valeant based on the fact that they raise prices.

5. The Senate of course has to have it's go at the great bowl of bullshit. Why are they giving Valeant an out by only focusing on only 4 drugs? Why are they letting Ackman off the hook with his oh I didn't know what they were doing bullshit? If I was the chairman and wanted to do my job, following that testimony would be subpoenas of Pershing Square research and investment thesis documents relating to Valeant followed by perjury charges. But that's not gonna happen so they enjoy their own big helping at the great bowl of bullshit.

 

In the end, I stand with Munger. This is a sewer. Various people can try to spin it and mould it any way they wish but the smell will give it away and the non ignorant will know which bowl they're feeding from.

 

Sorry for the rant, this has been building up for a while but it had to be said.

 

[arcube]

Oh give me a break! This is so much bullshit! There is enough bullshit to go around for everyone to get a giant helping.

 

First of all and I think this one takes the cake, is guys like Ackman who act all tough talking about being tough and wise and shrewd. Put this whole militaristic persona. (Remember when he threatened thermo-nuclear war on the Canadian-Pacific Board?). But in reality they're so thin skinned. They get all butthurt like a high school girl and start sending "ma he's looking at me funny emails" when a 90 year old dude gives a 15 second off the cuff remark at some obscure meeting only attended by value investing super geeks and not covered by anyone just cause he picked on his pretty boy.

 

Secondly, what happened? If all it would take for Buffett or Munger is to have one meeting with Pearson to see that he's such a great guy and manager and the second coming of Jesus, what actually happened? How could Ackman judge his bunk mate so wrong that he had to fire him now? Is he a moron?

 

Thirdly, the senate hearing... Let's call that burning bullshit superfest.

  1.Pearson didn't want to show up until he was threatened with a contempt of congress charge. Them he shows up doing the whole "Oh, me so sowey. I  didn't know me dramatically raising prices on life saving drugs is gonna affect people".

  2. Ackman being all contrite and not threatening thermo-nuclear war. Could this be because the US government actually has thermo-nuclear weapons?

  3. Ackman acting like he deserves a deep, long stroking cause he recommended (possibly will be implemented?) a 30% cut for only those 4 drugs? which means that the cheap drugs cardio drug whose price was raised by 500% now will only be 320% more expensive and the Wilson's drug that went from $700 co-pay to $26,000 co-pay now is at $18,200 co-pay? Gee, thanks, you're a prince!

  4. Ackman, mister I read a thousand gazillion documents in my research before I make an investment didn't know that Valeant (my largest investment) raises prices substantially post acquisition. Well I know a number of people on a value investing super geek board that figured that out without the resources of a muti-billion dollar hedge fund. Maybe we should get him a subscription to increase his research capability. That testimony is either perjury or he should be sued for gross negligence - now we also have buffet that said that he's been pitched on Valeant based on the fact that they raise prices.

5. The Senate of course has to have it's go at the great bowl of bullshit. Why are they giving Valeant an out by only focusing on only 4 drugs? Why are they letting Ackman off the hook with his oh I didn't know what they were doing bullshit? If I was the chairman and wanted to do my job, following that testimony would be subpoenas of Pershing Square research and investment thesis documents relating to Valeant followed by perjury charges. But that's not gonna happen so they enjoy their own big helping at the great bowl of bullshit.

 

In the end, I stand with Munger. This is a sewer. Various people can try to spin it and mould it any way they wish but the smell will give it away and the non ignorant will know which bowl they're feeding from.

 

Sorry for the rant, this has been building up for a while but it had to be said.

 

+1. Glad you got it out of your system. I like how CM calls it the way he sees it while he is munching like a horse on peanut brittle.

[LC]

That was awesome. Rant on, brother

[ZenaidaMacroura]

If you read carefully in the email he says "I believe Jorge Paulo personally became a shareholder", so not exactly confirming it. But nevertheless idiotic to even bring it up that way hoping to bait the master into a meeting.

Ackman meant he believes that the meeting was the reason that Jorge Paulo took a stake.  He wasn't really questioning or guessing whether the stake exists.  If you read carefully the second email to Charlie, he is more clear with his wording:

 

http://i.imgur.com/UauhHrG.png

 

[ccplz]

Oh give me a break! This is so much bullshit! There is enough bullshit to go around for everyone to get a giant helping.

 

First of all and I think this one takes the cake, is guys like Ackman who act all tough talking about being tough and wise and shrewd. Put this whole militaristic persona. (Remember when he threatened thermo-nuclear war on the Canadian-Pacific Board?). But in reality they're so thin skinned. They get all butthurt like a high school girl and start sending "ma he's looking at me funny emails" when a 90 year old dude gives a 15 second off the cuff remark at some obscure meeting only attended by value investing super geeks and not covered by anyone just cause he picked on his pretty boy.

 

Secondly, what happened? If all it would take for Buffett or Munger is to have one meeting with Pearson to see that he's such a great guy and manager and the second coming of Jesus, what actually happened? How could Ackman judge his bunk mate so wrong that he had to fire him now? Is he a moron?

 

Thirdly, the senate hearing... Let's call that burning bullshit superfest.

  1.Pearson didn't want to show up until he was threatened with a contempt of congress charge. Them he shows up doing the whole "Oh, me so sowey. I  didn't know me dramatically raising prices on life saving drugs is gonna affect people".

  2. Ackman being all contrite and not threatening thermo-nuclear war. Could this be because the US government actually has thermo-nuclear weapons?

  3. Ackman acting like he deserves a deep, long stroking cause he recommended (possibly will be implemented?) a 30% cut for only those 4 drugs? which means that the cheap drugs cardio drug whose price was raised by 500% now will only be 320% more expensive and the Wilson's drug that went from $700 co-pay to $26,000 co-pay now is at $18,200 co-pay? Gee, thanks, you're a prince!

  4. Ackman, mister I read a thousand gazillion documents in my research before I make an investment didn't know that Valeant (my largest investment) raises prices substantially post acquisition. Well I know a number of people on a value investing super geek board that figured that out without the resources of a muti-billion dollar hedge fund. Maybe we should get him a subscription to increase his research capability. That testimony is either perjury or he should be sued for gross negligence - now we also have buffet that said that he's been pitched on Valeant based on the fact that they raise prices.

5. The Senate of course has to have it's go at the great bowl of bullshit. Why are they giving Valeant an out by only focusing on only 4 drugs? Why are they letting Ackman off the hook with his oh I didn't know what they were doing bullshit? If I was the chairman and wanted to do my job, following that testimony would be subpoenas of Pershing Square research and investment thesis documents relating to Valeant followed by perjury charges. But that's not gonna happen so they enjoy their own big helping at the great bowl of bullshit.

 

In the end, I stand with Munger. This is a sewer. Various people can try to spin it and mould it any way they wish but the smell will give it away and the non ignorant will know which bowl they're feeding from.

 

Sorry for the rant, this has been building up for a while but it had to be said.

 

You sound bitter. Lost a little too much money on your VRX trade because of Ackman's presentation last year??

[rb]

You sound bitter. Lost a little too much money on your VRX trade because of Ackman's presentation last year??

 

Didn't have a position in VRX.  And how does that sound bitter?? ???

[PatientCheetah]

Thank Munger for the cheap shares  ;)

[Guest roark33]

I seem to recall a similar post saying, "Thanks Left for the cheap shares." 

 

Good luck with that....

[Guest Schwab711]

Thank Munger for the cheap shares  ;)

 

I'll take the other side of the trade if you're willing to cash-settle in 3 years or when they delist ;)

[PatientCheetah]

I would decline your invitation. It is not a compounding moat/with a shrinking intrinsic value. I am glad to make 20-30% jumping in and out. Beside, why give away the optionality for free :)