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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi Peter,
Sorry for another question on the same companies. Jason Donville recently recommended Valeant and Concordia and Bill Ackman owns a fair amount of Valeant shares. These folks are very smart people. I understand that the shorts are effectively ruling the show right now as the same thing happened to Nobilius Health. The stocks are not reoovering. One would think that if the fundamentals are there, the stocks would have a bit of comeback. What is missing here please given your experience?
Read Answer Asked by umedali on October 21, 2015
Q: My apologies for adding to the barrage of questions on Concordia -- I promise to sit on my hands on any further questions until the end of the year. Pinky swear : )

Now, what validity should be attached to the Citron Research report? Is it factual? Is it accurate? Is it truthful -- three very distinct entities, from a legal perspective.

More importantly, what's Citron's vested interest in all this?

From my understanding, the prime researcher on this is a renowned short-seller, so is this report as obvious a ploy as it looks?

Being naive? Or conspiratorial?

I'm just not sure what to believe anymore. I'm holding on to my shares for now, in this gale-force wind, because 5 I reiterates that there is value in the stock and that the fundamentals will speak for themselves, if we can hang on through all this noise.

Thanks for your advice, as always.

Read Answer Asked by Sylvia on October 21, 2015
Q: Do you think that the fundamental profit drivers of Concordia have changed? CXR has borrowed lots of money to make acquisitions based on the assumption that they can increase drug prices. The CEO of Valiant seems to be suggesting this pricing power might be gone. Since CXR is a highly leveraged play, maybe the fundamental are not nearly as good in this new drug pricing environment?
Read Answer Asked by Kent on October 21, 2015
Q: Hi Peter and Associates, CXR is going down again today significantly. They released a press regarding their debt financiang. What is your take on that? Really I don't get it, Jason Donnville recommended this yesterday @BNN and still its keep getting hammered. Is there any real risk of not closing this deal? Is there something we don't know. Also say they close this deal and they don't do any deals for next 3 years, would they be debt free? How do you compare their debt with other similar companies like AGN/VRX? Also if someone has a fresh dollar today , which one would you suggest VRX or CXR?
Read Answer Asked by Sridip on October 21, 2015
Q: Hi Peter and Team,
When Jason Donille was on BNN's Market Call a day or two ago, he commented that as a result of the recent plunge in its share price to $40, CXR's PE ratio has now dropped to 4x. But according RBC's web site, at today's closing price of $35.33, CXR has a PE ratio of 52.2x. Would you please comment on this huge discrepancy between the 2 PE ratios as quoted on BNN and RBC's web site, respectively.

Regards,

H.S.
Read Answer Asked by Harry on October 21, 2015
Q: Latest update from CXR:

http://www.newswire.ca/news-releases/concordia-provides-update-on-term-loan-financing-and-reconfirms-blended-interest-rate-of-approximately-725-post-amco-acquisition-534766791.html

The loans in connection to the financing of AMCo have been fully allocated and CXR has reaffirmed the 7.25% blended interest rate.
Read Answer Asked by Arneh on October 20, 2015
Q: A follow-up regarding the senior notes announced today at 9.5%.

Per http://concordiarx.com/concordia-provides-update-on-amco-financing-and-capital-structure-post-amco-acquisition/ , the maximum blended interest rate (including the new $790m of senior notes) is 7.25%. Therefore, if I'm understanding correctly, the senior notes announced today aren't priced any higher than CXR was expecting them to be on Oct. 15.
Read Answer Asked by Arneh on October 20, 2015
Q: Hello Team,
there have been more than enough inquiries about this company, here is another. Today, a 'Marketwatch' article indicated that the company has now determined the issue of unsecured senior notes of US$790m at 9.5%. There appears to be a negativity about the company and its difficulties in financing the acquisition. Would you be able to find out with respect to short sellers whether the stock suffers from serious manipulation? And if so, why is there no news from the company?
Communication should be key!
Thanks
Read Answer Asked by Sigrid on October 20, 2015
Q: What's your take on the recent press release by Concordia regarding the offering of senior notes?

http://concordiarx.com/concordia-healthcare-announces-pricing-of-offering-of-senior-notes/

CXR seems to be conducting business as usual, getting deals done and closing the AMCo acquisition. The continued hammering of the share price is baffling.
Read Answer Asked by Arneh on October 20, 2015
Q: CXR hit $35. I have two questions. First, Jason Donville said that he called brokers and was told that a lot of the shares were owned on margin. Can we trust it is true and can we verify this using a bloomberg terminal or website? If not, it seems like a good way for a portfolio manager like him to encourage us to buy the "bag holders". Secondly, there is news today about Concordia offering "senior notes". Is there something not to like there? I don't know what "senior notes" are. Thank you!
Read Answer Asked by Matt on October 20, 2015
Q: Is CXR a compelling buy yet or stay away? I have been holding off adding to have a full weighting in my position. The financing terms were obviously unfavorable based on the plunge today but at least it's done. My cost is substantially higher. what are your thoughts?

Thank you
Read Answer Asked by Douglas on October 20, 2015
Q: Hello Peter,
This is just and example but wanted your opinion. If you had 20k and the amount represented 5% of the portfolio, how much would you put into the 4 stocks: cxr, vrx, phm, nhc. I was thinking 10k cxr, 5k vrx, 2.5k phm, and 2.5k nhc. Appreciate your comments.
Read Answer Asked by umedali on October 20, 2015
Q: I know, another PHM question...

In 2015 they acquired $161 million in businesses:
- Black Bear Medical = $10.3 M
- West Home Health Care = $14.2 M
- Legacy Oxygen = $4.2 M
- Sleep Management = $98 M
- Patient Aids = $34.3 M

In addition, their pre-2015 businesses were generating $35 million in revenue and $8.8 million in EBITDA.

The market value of PHM is now $117 million.

Assuming they didn't overpay for the 2015 acquisitions, I'm just wondering how there could be downside concerns, beyond the short-term, from here? Thanks
Read Answer Asked by Darcy on October 20, 2015
Q: With phm at new lows daily.The stock is obviously telling us something is wrong.What would make you go to a sell on this stock?Obviously the fundamentals would make your decision.The stock to me looks like .30 is where support comes in.Would there be good value @30 cents based on the new revenue guidance?
Read Answer Asked by glenn on October 19, 2015
Q: I'm considering investing in this medical technology company based in Ireland, and would like your opinion on its stability and growth potential. Is it still a good buy at $74.
Many thanks
Read Answer Asked by Janet on October 19, 2015
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