Liberty Posted June 26, 2015 Share Posted June 26, 2015 Yes I have. Good. Then you can share your analysis of the company and tell us the flaws in the thesis of those who are positive on the company. Link to comment Share on other sites More sharing options...
Jurgis Posted June 26, 2015 Share Posted June 26, 2015 I'm going to try and tread carefully here, because this is the internet, and it's hard (impossible, really) to convey tone and other non-verbal cues. One of the things I've begun to notice in this thread (and others, like SHLD, BH, AMZN, etc.) is that negative (sometimes even neutral) posts are interpreted as "attacks" (sorry loganc, not intentionally trying to call you out here) and positive posts are interpreted as "cheerleading" (sorry, Jurgis, same disclaimer as with loganc). Both of these thoughts incorporate an intention that may not actually be present in the person's statements. Part of it is tribalism. Part of it is endowment effect. Part of it is that, on the internet, we just tend to go to extremes. There are probably a half dozen other cognitive biases at work on either side. Just a friendly thought that we should at least give most of the posters here the benefit of the doubt that we are all trying to do provide value rather than just talking something up or talking something down. Thanks merkhet. Link to comment Share on other sites More sharing options...
Jurgis Posted June 26, 2015 Share Posted June 26, 2015 Yes I have. Good. Then you can share your analysis of the company and tell us the flaws in the thesis of those who are positive on the company. No, I won't. See post by Merkhet. Good luck. Link to comment Share on other sites More sharing options...
Liberty Posted June 26, 2015 Share Posted June 26, 2015 Yes I have. Good. Then you can share your analysis of the company and tell us the flaws in the thesis of those who are positive on the company. No, I won't. See post by Merkhet. Good luck. Merkhet's post doesn't explain why you can't contribute analysis, but suit yourself. Link to comment Share on other sites More sharing options...
giofranchi Posted June 26, 2015 Author Share Posted June 26, 2015 All I'm doing is trying to get to the bottom of what people are saying and challenging statements that I think are incorrect to see if there are arguments from the other side that can convince me. So far, I haven't seen anything of substance, but I'm always looking. You're welcome to change my mind if you have anything solid to contribute. Imo now that organic growth is very clearly shown at the end of each quarter, business results speak for themselves. Period. Cheers, Gio Link to comment Share on other sites More sharing options...
Jurgis Posted June 26, 2015 Share Posted June 26, 2015 I won't contribute analysis, because the result of this will be: - It's not that different from what has been discussed before - None of the bulls will agree with it - The responses will be as discussed above by me and Merkhet - I have no dog in this fight although I have analyzed the company multiple times. I don't need to get into another fight just because I have an opinion. It won't improve my investing results or my quality of life, etc. BTW, I pretty much agree with the private post thepupil sent to you. Take care Link to comment Share on other sites More sharing options...
Liberty Posted June 26, 2015 Share Posted June 26, 2015 Now Faber is apparently on CNBC saying that he doesn't think there's a deal, that it might have been just an approach by Valeant. Link to comment Share on other sites More sharing options...
Happy Posted June 26, 2015 Share Posted June 26, 2015 The combined market caps of Salix and Zoetis are smaller than the offer for Allergan was and VRX now trades at ~$230 versus ~$130 when they bid for Allergan. So I can see how there might be a way to make it work. But I hope Pearson realized how steep a price he actually would have paid for Allergan already by issuing so much undervalued equity (as with the current VRX price the offer was significantly higher than that of Actavis). It definitely seems more prudent to pay down the debt and then make a move even though Zoetis might well be gone by then though so Zoetis should better be really good and there should be a lot of cost to cut if the news is real. Link to comment Share on other sites More sharing options...
Liberty Posted June 26, 2015 Share Posted June 26, 2015 The combined market caps of Salix and Zoetis are smaller than the offer for Allergan was and VRX now trades at ~$230 versus ~$130 when they bid for Allergan. So I can see how there might be a way to make it work. But I hope Pearson realized how steep a price he actually would have paid for Allergan already by issuing so much undervalued equity (as with the current VRX price the offer was significantly higher than that of Actavis). It definitely seems more prudent to pay down the debt and then make a move even though Zoetis might well be gone by then though so Zoetis should better be really good and there should be a lot of cost to cut if the news is real. Issuing the equity for Allergan would have hurt, but Allergan was arguably pretty undervalued itself, and there was a lot of fat to cut and synergies to be had, so it wouldn't have hurt as much as issuing equity for ZTS which seems a lot richer (though mitigating that a bit, VRX equity is less undervalued than it was). I've been playing with a few assumptions with ZTS (improving GMs, cutting SGA and R&D to VRX level, tax rate, etc) and while that would make ZTS worth a fair bit more than it is now, the price still wouldn't be anything close to as good as it was with the original AGN offer. So I don't see it, but I'm open to an explanation as to why ZTS is worth this much. I don't think Pearson would overpay, and Ackman (and Bill Doyle, his healthcare guy) is very smart. I wouldn't be surprised if they see something beyond the current numbers at ZTS, an opportunity to significantly improve profitability and growth. ZTS certainly seems to have a quality, durable portfolio, but I don't see how VRX could hit its 6-year payback target (which they might stretch a bit for very big deal, but even 7-8 years would be hard to see with my pf numbers). So I suppose I'm kind of glad that Faber is saying there's no deal, but if there was, I'd have waited to hear management explain its rationale and gone from there. Link to comment Share on other sites More sharing options...
Liberty Posted June 29, 2015 Share Posted June 29, 2015 Looking at CanadianInsider.com, it looks like VRX has repurchased 224,215 shares at $223 USD on June 16 and cancelled them. That’s about $50m. Link to comment Share on other sites More sharing options...
Happy Posted June 29, 2015 Share Posted June 29, 2015 Hm weird. When I look at Yahoo Finance it shows that the low for June 16 was $225.80, but their price says $223. Link to comment Share on other sites More sharing options...
Liberty Posted June 29, 2015 Share Posted June 29, 2015 Hm weird. When I look at Yahoo Finance it shows that the low for June 16 was $225.80, but their price says $223. I noticed that too. Not sure if that's a mistake or if maybe they could they have bought some big block in a dark pool or somewhere that doesn't get recorded on the public ticker tape..? Edit: Another thing... These buybacks make me think that there won't be a big merger with lots of equity issued soon. Management has mentioned often recently that they think their stock is undervalued. I think it's more likely that we'll see more small and mid-sized deals for a little while, at least until the Salix inventory runs down and synergies start to take effect. Hopefully by then they'll have a few more quarters of nice organic growth under their belts, Salix's artificially depressed EBITDA will normalize, and the reduced net leverage will give them more options to look at bigger things. Link to comment Share on other sites More sharing options...
giofranchi Posted June 30, 2015 Author Share Posted June 30, 2015 So I don't see it, but I'm open to an explanation as to why ZTS is worth this much. I wonder: if ZTS stock price is so high, why is Ackman still holding it in PSH's portfolio? Why isn't he just selling it at a sound profit? ??? Gio Link to comment Share on other sites More sharing options...
giofranchi Posted June 30, 2015 Author Share Posted June 30, 2015 Edit: Another thing... These buybacks make me think that there won't be a big merger with lots of equity issued soon. Management has mentioned often recently that they think their stock is undervalued. I think it's more likely that we'll see more small and mid-sized deals for a little while, at least until the Salix inventory runs down and synergies start to take effect. Hopefully by then they'll have a few more quarters of nice organic growth under their belts, Salix's artificially depressed EBITDA will normalize, and the reduced net leverage will give them more options to look at bigger things. I agree. And that would be a nice thing to see! Gio Link to comment Share on other sites More sharing options...
Liberty Posted June 30, 2015 Share Posted June 30, 2015 So I don't see it, but I'm open to an explanation as to why ZTS is worth this much. I wonder: if ZTS stock price is so high, why is Ackman still holding it in PSH's portfolio? Why isn't he just selling it at a sound profit? ??? Gio That's my main reason for thinking that there's probably an explanation. But suspecting that there's an explanation is not the same as understanding that explanation. What do you think about ZTS' valuation? Link to comment Share on other sites More sharing options...
Phaceliacapital Posted June 30, 2015 Share Posted June 30, 2015 What do you think? I looked at it a year ago and didn't think it was cheap.. Link to comment Share on other sites More sharing options...
giofranchi Posted June 30, 2015 Author Share Posted June 30, 2015 What do you think about ZTS' valuation? Sincerely, I don’t know… If you ignore how much fat could be cut off, how can you judge how reasonable a bargain ZTS might prove to be for VRX? VRX, 3G, and others have shown very clearly by now that true value is found where other investors don’t see it. Because other investors are not ultimately able to foresee which results could be achieved by running things more efficiently! Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted June 30, 2015 Share Posted June 30, 2015 What do you think about ZTS' valuation? Sincerely, I don’t know… If you ignore how much fat could be cut off, how can you judge how reasonable a bargain ZTS could prove to be for VRX? VRX, 3G, and others have shown very clearly by now that true value is found where other investors don’t see it. Because other investors are not ultimately able to foresee which results could be achieved by running things more efficiently! Cheers, Gio I'm not ignoring how much fat can be cut off. I've been playing with the numbers (adjusting gross margins, SGA, R&D, tax, etc), and as best as I can see, I can get it from "expensive" to "decent". But what Valeant usually likes to do (as with Allergan) is get things from "pretty decent" to "pretty cheap after restructuring". And if ZTS was bought by someone else than VRX, I doubt the acquirer would be able to get as much cost savings out of it, so I'm not sure what kind of IRRs they'd get... But as I said, I'm open to the idea that there's something I'm missing about ZTS that makes it worth that higher price. It certainly seems to have leadership in a big niche, lots of durable assets, fat to cut, etc. But that's not worth any price... Link to comment Share on other sites More sharing options...
giofranchi Posted June 30, 2015 Author Share Posted June 30, 2015 It certainly seems to have leadership in a big niche, lots of durable assets, fat to cut, etc. But that's not worth any price... Agreed. As I have said, I really don’t know. And I don’t understand what’s going on here… If ZTS stock price doesn’t come down, it might be too pricy for VRX to consider buying… On the other hand, if its stock price comes down, Ackman would lose the paper gains he has enjoyed so far… Therefore, how is Ackman going to profit from here? And if he can’t, why is he not simply selling? Gio Link to comment Share on other sites More sharing options...
OnTheShouldersOfGiants Posted June 30, 2015 Share Posted June 30, 2015 I suspect that Zoetis is currently not for sale. I think Ackman & team is going to cut SG&A, R&D and COGS close to VRX type levels, they will acquire/merge with a company in a much better tax jurisdiction. They've said they're willing to take on debt and make acquisitions as well. In short I believe Ackman is starting his own little VRX Link to comment Share on other sites More sharing options...
Liberty Posted June 30, 2015 Share Posted June 30, 2015 It certainly seems to have leadership in a big niche, lots of durable assets, fat to cut, etc. But that's not worth any price... Agreed. As I have said, I really don’t know. And I don’t understand what’s going on here… If ZTS stock price doesn’t come down, it might be too pricy for VRX to consider buying… On the other hand, if its stock price comes down, Ackman would lose the paper gains he has enjoyed so far… Therefore, how is Ackman going to profit from here? And if he can’t, why is he not simply selling? Gio He can sell it to someone who's not as disciplined as VRX and will overpay. He'll probably try to fix it up some first, make it more profitable, improve growth, and then find a buyer. Pearson doesn't seem that interested in working with Ackman again anyway*, so I'm not assuming the buyer will be VRX. It's a possibility, but I don't see these two automatically walking hand-in-hand and scheming together on the next joint venture... You can usually take Pearson at his word: “[Allergan] would have been a nice acquisition for us, [but] I think we marched on quite well without it,” Mr. Pearson said in an interview after the analyst call. “I view it as more of a speedbump than anything else.” [...] Valeant still enjoys a “good relationship” Mr. Ackman, but Mr. Pearson said it’s not likely Valeant will try to do another deal with him in the future. “At this point, he is still an active Allergan shareholder and is focused on that,” Mr. Pearson said. “We have nothing in the works. You can never say never, but if I was ever going to say never, it would probably be on something like this.” The only thing that is slightly ambiguous about the piece is if whether they were only talking about hostile deals and that context was removed or if they were talking about working together in general. But Pearson is opportunistic, so the right deal coming from Ackman would probably work, I just doubt they're interested in going hostile again, so it would probably be friendly. http://business.financialpost.com/investing/valeant-pharmaceuticals-inc-moves-on-after-allergan-bill-ackman-speedbump Link to comment Share on other sites More sharing options...
giofranchi Posted July 1, 2015 Author Share Posted July 1, 2015 http://seekingalpha.com/article/3296485-does-valeant-have-the-financial-flexibility-to-acquire-zoetis?auth_param=7i5hb:1ap7msd:49b9c6b64b1bbc2faf1adcdf43f3db91&uprof=25 Gio Link to comment Share on other sites More sharing options...
giofranchi Posted July 17, 2015 Author Share Posted July 17, 2015 Valeant Pharmaceuticals Agrees To Acquire Amoun Pharmaceutical http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-Pharmaceuticals-Agrees-To-Acquire-Amoun-Pharmaceutical/default.aspx Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 17, 2015 Share Posted July 17, 2015 Excellent. The June 16 rumor was true after all (they guessed 700-800m). Largest pharma in Egypt, annual growth of 20%, a platform for the fast-growing middle-east. I'm happy about it :) Link to comment Share on other sites More sharing options...
JoeDawg Posted July 19, 2015 Share Posted July 19, 2015 Pearson talking about Amoun and commitment to reducing leverage: http://www.bnn.ca/News/2015/7/17/Valeant-to-buy-Egyptian-drug-maker-for-800-million.aspx Link to comment Share on other sites More sharing options...
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