VRX - Valeant Pharmaceuticals International Inc.

[giofranchi]

Jeffrey W. Ubben, CEO Of ValueAct Capital, Appointed To The Board Of Valeant Pharmaceuticals

 

"ValueAct is delighted to once again be a part of the Valeant Board of Directors," stated Jeffrey W. Ubben, chief executive officer of ValueAct Capital.  "Valeant has been an important component to ValueAct's success over the past seven years and we strongly believe in Valeant's business model and strategy. Valeant has become significantly undervalued on a standalone basis due to recent unjustified attacks on the company.  We are strongly supportive of the Allergan-Valeant combination in light of their perfect strategic fit and the potential to create enormous shareholder value for both companies.  ValueAct has not reduced its position in Valeant since leaving the Board in May and we expect to increase our already substantial position in Valeant. I look forward to working with Mike and the Board of Directors to help secure the Allergan transaction and then continuing to serve on the Board to deliver long-term value to all shareholders."

 

 

http://ir.valeant.com/investor-relations/news-releases/news-release-details/2014/Jeffrey-W-Ubben-CEO-Of-ValueAct-Capital-Appointed-To-The-Board-Of-Valeant-Pharmaceuticals/default.aspx

 

 

Gio

[rpadebet]

Jeffrey W. Ubben, CEO Of ValueAct Capital, Appointed To The Board Of Valeant Pharmaceuticals

 

"ValueAct is delighted to once again be a part of the Valeant Board of Directors," stated Jeffrey W. Ubben, chief executive officer of ValueAct Capital.  "Valeant has been an important component to ValueAct's success over the past seven years and we strongly believe in Valeant's business model and strategy. Valeant has become significantly undervalued on a standalone basis due to recent unjustified attacks on the company.  We are strongly supportive of the Allergan-Valeant combination in light of their perfect strategic fit and the potential to create enormous shareholder value for both companies.  ValueAct has not reduced its position in Valeant since leaving the Board in May and we expect to increase our already substantial position in Valeant. I look forward to working with Mike and the Board of Directors to help secure the Allergan transaction and then continuing to serve on the Board to deliver long-term value to all shareholders."

 

 

http://ir.valeant.com/investor-relations/news-releases/news-release-details/2014/Jeffrey-W-Ubben-CEO-Of-ValueAct-Capital-Appointed-To-The-Board-Of-Valeant-Pharmaceuticals/default.aspx

 

 

Gio

 

Thanks Gio. This is very good news indeed. Especially this part....

ValueAct has not reduced its position in Valeant since leaving the Board in May and we expect to increase our already substantial position in Valeant.

[Liberty]

http://ir.valeant.com/investor-relations/news-releases/news-release-details/2014/Bausch--Lomb-and-Nicoxs-Glaucoma-Candidate-VESNEO-latanoprostene-bunod-Meets-Primary-Endpoint-in-Phase-3-Studies/default.aspx

 

Valeant Pharmaceuticals International, Inc.'s (NYSE: VRX and TSX: VRX) wholly owned subsidiary, Bausch + Lomb, and Nicox S.A. (NYSE Euronext Paris: COX) today announced positive top-line results from the pivotal Phase 3 studies conducted with VESNEO (latanoprostene bunod; previously known as BOL-303259-X and NCX 116) for the reduction of intraocular pressure (IOP) in patients with glaucoma or ocular hypertension.  VESNEO is a novel nitric oxide-donating prostaglandin F2-alpha analog licensed by Nicox to Bausch + Lomb. These studies met their primary endpoint and showed positive results on a number of secondary endpoints. This product has peak sales potential of ~$500 million+ in the U.S. alone and ~$1 billion+ globally. These positive results follow three successful approvals from the Food and Drug Administration (FDA) in the last year, including approvals for  Luzu® (luliconazole) Cream, Jublia® (efinaconazole 10% topical solution) and Retin-A Micro (tretinoin) Gel microsphere 0.08%, and further validate our unique output-driven approach to R&D.

 

More great news.

[loganc]

Hempton has recently equated Valeant with Enron on Twitter.  I suppose Ubben is joining the board to completely savor the imminent Enron-style collapse of Valeant.  Also, why only burn 2.4B of your fund when you can throw another couple hundred million into the fire?

[wbr]

Hempton has recently equated Valeant with Enron on Twitter.  I suppose Ubben is joining the board to completely savor the imminent Enron-style collapse of Valeant.  Also, why only burn 2.4B of your fund when you can throw another couple hundred million into the fire?

 

I wasnt around back then. Did high profile fund managers actually fall for Enron and ruin their careers?

 

Because generally I think some money managers earn a good reputation, but that doesnt protect them from blowing up. I was surprised to learn that Third Avenue was on the other side of Ackmann's MBIA short. And at this point it is obvious that either Ackman or Icahn will lose the Herbalife battle.

 

So imo Value Act expressing high conviction and the Valeant model being unsustainable are not mutually exclusive especially since they are in it from the beginning and might have fallen in love with it.

 

That being said, Valeant is one of my largest positions. Im just trying to put things into perspective and not be bullish because Value Act is bullish.

[Picasso]

Hempton has recently equated Valeant with Enron on Twitter.  I suppose Ubben is joining the board to completely savor the imminent Enron-style collapse of Valeant.  Also, why only burn 2.4B of your fund when you can throw another couple hundred million into the fire?

 

I have been on the fence about this stock for a while.  It seems to me that the likelihood of the Allergan acquisition is now somewhere north of 70% whereas I was thinking closer to 30% a month ago.  Obviously nothing scientific about my odds, but it was what I have concluded in the last several days.

 

It appears to me that bringing Ackman on board to get this deal done was the best thing Valeant could have done.  Say what you will about the guy, but he is so loud and obnoxious that he will chase down AGN until they run out of energy.  Sort of like a human tracking down a deer until it collapses from exhaustion.  Quite frankly I have no idea where Ackman gets the energy to take on all these projects (FNMA, HLF, etc).

 

The end result seems to have ticked off ValueAct as well.  You will probably have more shareholders of AGN on board with Jeff Ubben making this commitment so it is a bit more reflexive than just a hedge fund doubling down on a stock they own.

 

Sorry Hempton, but I am going long the stock as well.  I just wish I had loaded up when the stock was under $110 a couple weeks ago.

[mankap]

I agree, without Ackman I would put the chances of AGN acquisition close to Zero. Still it could take long time to get decided one way or the other.

Even if VRX cannot acquire AGN, I think it is worth trying it as the rewards are substantial.

[cubsfan]

Hempton has recently equated Valeant with Enron on Twitter.  I suppose Ubben is joining the board to completely savor the imminent Enron-style collapse of Valeant.  Also, why only burn 2.4B of your fund when you can throw another couple hundred million into the fire?

 

I wasnt around back then. Did high profile fund managers actually fall for Enron and ruin their careers?

 

Because generally I think some money managers earn a good reputation, but that doesnt protect them from blowing up. I was surprised to learn that Third Avenue was on the other side of Ackmann's MBIA short. And at this point it is obvious that either Ackman or Icahn will lose the Herbalife battle.

 

So imo Value Act expressing high conviction and the Valeant model being unsustainable are not mutually exclusive especially since they are in it from the beginning and might have fallen in love with it.

 

That being said, Valeant is one of my largest positions. Im just trying to put things into perspective and not be bullish because Value Act is bullish.

 

ValueAct has been involved with Valeant for 8 years now. Pearson is essentially their handpicked CEO to execute this rollup strategy.

So there is little chance that Ubben doesn't know what's going on. They understand Valeant inside out. If they blow up, it will be

that their strategy blew it up.

[Guest wellmont]

Hempton has recently equated Valeant with Enron on Twitter.  I suppose Ubben is joining the board to completely savor the imminent Enron-style collapse of Valeant.  Also, why only burn 2.4B of your fund when you can throw another couple hundred million into the fire?

he was very vocal on this the last time down.

he's been very silent on this as it has gone up.

for the life of me I don't get his thesis. it seems to me he believes non gaap earnings are suspect and

a sign of faulty accounting.

[original mungerville]

Hempton has recently equated Valeant with Enron on Twitter.  I suppose Ubben is joining the board to completely savor the imminent Enron-style collapse of Valeant.  Also, why only burn 2.4B of your fund when you can throw another couple hundred million into the fire?

he was very vocal on this the last time down.

he's been very silent on this at his gone up.

for the life of me I don't get his thesis. it seems to me he believes non gaap earnings are suspect and

a sign of faulty accounting.

 

For the life of me, I don't get him. Once you have analyzed his thesis, and you disagree with him, I would not pay any more attention to him. He's good, but just not good enough to listen to.

[Liberty]

Hempton has recently equated Valeant with Enron on Twitter.  I suppose Ubben is joining the board to completely savor the imminent Enron-style collapse of Valeant.  Also, why only burn 2.4B of your fund when you can throw another couple hundred million into the fire?

he was very vocal on this the last time down.

he's been very silent on this at his gone up.

for the life of me I don't get his thesis. it seems to me he believes non gaap earnings are suspect and

a sign of faulty accounting.

 

For the life of me, I don't get him. Once you have analyzed his thesis, and you disagree with him, I would not pay any more attention to him. He's good, but just not good enough to listen to.

 

It's personal for him. He hates Ackman. It affects his judgement. That's my theory, anyway...

[topofeaturellc]

Yes. High profile money managers owned Enron. You could argue it basically destroyed Alliance Capital. One of their higher profile PMs was on the board.

 

As for Hempton - to me it's pretty clear what he is up to. Best I can tell his actual underlying short thesis is basically the same thesis you see everywhere. Debt fueled roll up, non-gaap earnings story, lack of cash flow. Everything else he says is just rhetoric to get people to start to question the non-gaap earnings story management promotes. Right if people start to question Pearson's truthfulness in other areas then they start to question the adjusted earnings and maybe price the thing on gaap, maybe the credit markets get a little more nervous, maybe the story unravels.

 

He's basically making an ad hominem attack on Pearson to create a catalyst for the short. It is straight out of the short sellers playbook.

 

There are smart people who are often correct on both sides of any truly controversial investment it seems silly to judge people based on one investment.

 

[original mungerville]

Yes. High profile money managers owned Enron. You could argue it basically destroyed Alliance Capital. One of their higher profile PMs was on the board.

 

As for Hempton - to me it's pretty clear what he is up to. Best I can tell his actual underlying short thesis is basically the same thesis you see everywhere. Debt fueled roll up, non-gaap earnings story, lack of cash flow. Everything else he says is just rhetoric to get people to start to question the non-gaap earnings story management promotes. Right if people start to question Pearson's truthfulness in other areas then they start to question the adjusted earnings and maybe price the thing on gaap, maybe the credit markets get a little more nervous, maybe the story unravels.

 

He's basically making an ad hominem attack on Pearson to create a catalyst for the short. It is straight out of the short sellers playbook.

 

There are smart people who are often correct on both sides of any truly controversial investment it seems silly to judge people based on one investment.

 

We can judge him also on how Fairfax worked out for him on the short side. And by the people he was associating with during that trade.

[original mungerville]

Also in terms of who is in Valeant big time, Sequoia Fund is Valeant's largest shareholder and Valeant is also Sequoia's largest holding making up something like 18% of their fund.

 

So that is Sequoia, ValueAct and Bill Ackman who are into Valeant and Pearson big time.

[giofranchi]

So that is Sequoia, ValueAct and Bill Ackman who are into Valeant and Pearson big time.

 

I truly think Valeant will go on being a huge success.

 

The fact I am not comfortable enough with their business model is definitely a fault of mine… Nothing to do with Valeant!

 

Good people, good business, good price… It means you must understand why they are good people, why they are good businesses, why they are offered to you at good prices… Without understanding I am stuck…

 

I cannot understand if Pearson’s recipe for the pharma industry is truly the right one yet, and imo there still not enough evidence about it.

 

But, as I have said, the fault is mine… Very very ignorant… And that’s why my circle of competence is unfortunately so damn small! :(

 

Gio

 

[Liberty]

I cannot understand if Pearson’s recipe for the pharma industry is truly the right one yet, and imo there still not enough evidence about it.

 

Just to split hairs: I don't think Pearson's model has to be right for the whole pharma industry, just for the subset of it that he focuses on.

[giofranchi]

I don't think Pearson's model has to be right for the whole pharma industry, just for the subset of it that he focuses on.

 

I totally agree. :)

 

Gio

 

[loganc]

http://dealbook.nytimes.com/2014/09/26/another-critical-voice-joins-ackman-on-allergan/?_php=true&_type=blogs&_r=0

 

It also appears that T. Rowe Price has echoed Pentwater in a separate statement this afternoon. 

[Liberty]

http://dealbook.nytimes.com/2014/09/26/another-critical-voice-joins-ackman-on-allergan/?_php=true&_type=blogs&_r=0

 

It also appears that T. Rowe Price has echoed Pentwater in a separate statement this afternoon.

 

http://blogs.barrons.com/focusonfunds/2014/09/26/t-rowe-also-calls-for-shareholder-vote-on-allergans-plans/

[loganc]

And it continues...another AGN shareholder with a mere 1B+ position making critical statements of Pyott et al.

 

http://dealbook.nytimes.com/2014/09/27/major-allergan-investor-joins-chorus-against-salix-deal/?_php=true&_type=blogs&smid=tw-dealbook&seid=auto&_r=0

 

Can't wait to hear the public statements from the cohort of AGN shareholders that Pyott references in the following:

 

A substantial number of stockholders who consented to the special meeting have informed Allergan that they share Allergan's perspectives on Valeant and its offer and have no intention of voting in favor of the proposal to remove Allergan's directors.  To the contrary, their consent related solely to a desire to adhere to best practices in connection with corporate governance and the stockholder franchise, which Allergan respects and appreciates.

 

 

[merkhet]

And it continues...another AGN shareholder with a mere 1B+ position making critical statements of Pyott et al.

 

http://dealbook.nytimes.com/2014/09/27/major-allergan-investor-joins-chorus-against-salix-deal/?_php=true&_type=blogs&smid=tw-dealbook&seid=auto&_r=0

 

Can't wait to hear the public statements from the cohort of AGN shareholders that Pyott references in the following:

 

A substantial number of stockholders who consented to the special meeting have informed Allergan that they share Allergan's perspectives on Valeant and its offer and have no intention of voting in favor of the proposal to remove Allergan's directors.  To the contrary, their consent related solely to a desire to adhere to best practices in connection with corporate governance and the stockholder franchise, which Allergan respects and appreciates.

 

It's going to be funny when they're thrown out on their ass w/ a large portion of the votes.

[peter1234]

And it continues...another AGN shareholder with a mere 1B+ position making critical statements of Pyott et al.

 

http://dealbook.nytimes.com/2014/09/27/major-allergan-investor-joins-chorus-against-salix-deal/?_php=true&_type=blogs&smid=tw-dealbook&seid=auto&_r=0

 

Can't wait to hear the public statements from the cohort of AGN shareholders that Pyott references in the following:

 

A substantial number of stockholders who consented to the special meeting have informed Allergan that they share Allergan's perspectives on Valeant and its offer and have no intention of voting in favor of the proposal to remove Allergan's directors.  To the contrary, their consent related solely to a desire to adhere to best practices in connection with corporate governance and the stockholder franchise, which Allergan respects and appreciates.

 

It's going to be funny when they're thrown out on their ass w/ a large portion of the votes.

 

Funny except that severance and golden parachutes might make you cry.

 

;D

[Liberty]

Speculation about what might happen:

 

http://blogs.wsj.com/moneybeat/2014/09/29/dealpolitik-shareholders-may-have-little-influence-on-allergan-decision/

 

http://blogs.wsj.com/moneybeat/2014/09/29/where-the-allergan-valeant-salix-actavis-teva-fights-stand-now/

[Guest wellmont]

i think the wsj guy way underestimates the amount of pressure on Allergan bod if they go through with that deal to block the vrx deal. yes they could do it. but you have to believe that there has to be some self preservation psychology at work with some of those board members that will make them stop pause and think about the ramifications.

[Liberty]

i think the wsj guy way underestimates the amount of pressure on Allergan bod if they go through with that deal to block the vrx deal. yes they could do it. but you have to believe that there has to be some self preservation psychology at work with some of those board members.

 

Hopefully. That seems to be what Mr. Market believes. Salix is down 3% today.