Q: Hi Peter, How do you analyze the current situation? I heard on CNBC that it is not in debt holder's interest to serve them default notice as then debt will go down more in short term. What else is unknown? If we all agree with the guidance it is 2.5X 2016 earnings now. Do they have to issue any new debt? If not then there is no question of their borrowing rate going up. Am I right? So how does this temporary situation have any real business implications? You can figure out from my tone that I am long on this name. Now here is my reason for being long. 1. Every day 10000 people in north america turning 60 until 2030, so they got tailwind for derma and GI. 2. Also they have diversified across eastern Europe and mexico, so again well diversified. 3. US congress and senate still held by republicans, so even Hillary/Sanders cannot pass anything to curb drug prices in 2017-2018. 4.They have 3 very successful activist(2 valueAct, 1 pershing) on their board, who will extract value, also I hope they did/still doing extensive due diligence. 5. Debt- it is not mining or oil, they will have strong cash flow around $2 billion to pay the debt. Anyways, can you please come up with some points that a guy with short position will think at this price point?? Also please correct me if I am wrong in my long assumptions. I would better be wrong than loose money.
You can view 3 more answers this month. Sign up for a free trial for unlimited access.
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, I listened 2 hours conference call yesterday and went through the presentation and it seems like to me that their 2016 estimate is lowered because of some headwinds and also some because they want to be conservatives on their estimate. Did you feel the same from their call? Also I don't understand why could not they file 10-K before March 15? Cannot they ask their board committee to work extra hours for review? Or cannot they pay more to PWC to audit it faster? I don't understand the reason? With their lower earnings estimate it seems like they have 3 times 2016 earnings now? Do you think it is a contrarian buy now? What else can be other negative catalyst to take it more down from here? would you suggest to buy for 3 years hold?
Q: Just sell - NOW!! Don't wait another day! JUST SELL!!!
With 30B in debt; nearly 40B in questionable Goodwill & In-tangible Assets & no audited Financial Statements; - what else would you need. As well, apparently they are now in breach of their Walmart contract for non-compliance & of course, there is the US Justice Dept. investigation as well as the SEC probe. Sounds about right for an auction - if there will be any realizable assets.
With 30B in debt; nearly 40B in questionable Goodwill & In-tangible Assets & no audited Financial Statements; - what else would you need. As well, apparently they are now in breach of their Walmart contract for non-compliance & of course, there is the US Justice Dept. investigation as well as the SEC probe. Sounds about right for an auction - if there will be any realizable assets.
Q: Hello team,
In your investment history, have you seen anything like this recovering ever? Is VRX another Enron or another Amex?
Would at any point it make any sense to average down on this basket base? Or would this be throwing money away gain and a second mistake?
Who else could we trust for an honest, experienced, and informed opinion! Thanks!
In your investment history, have you seen anything like this recovering ever? Is VRX another Enron or another Amex?
Would at any point it make any sense to average down on this basket base? Or would this be throwing money away gain and a second mistake?
Who else could we trust for an honest, experienced, and informed opinion! Thanks!
Q: What are your thoughts on Valeant? Based on Bill Ackman's valuation, it seems that the market is drastically undervaluing this company.
Link to his presentation: http://assets.pershingsquareholdings.com/2014/09/Investor-Call-re-Valeant-Pharmaceuticals.pdf
Link to his presentation: http://assets.pershingsquareholdings.com/2014/09/Investor-Call-re-Valeant-Pharmaceuticals.pdf
Q: Just I last question on the Enron of Canada. With respect to SEC requirements in the US; is it not a requirement that an official investigation be immediately disclosed publicly?
In the case of VRX, I understand they received 2 official notices from the SEC regarding separate investigations in December, 2015.
In the case of VRX, I understand they received 2 official notices from the SEC regarding separate investigations in December, 2015.
Q: Hi,
I have a small position in VRX and am down 60%. Things don't seem to be getting better and mayt get worse. Sell or hold?
I have a small position in VRX and am down 60%. Things don't seem to be getting better and mayt get worse. Sell or hold?
Q: Just a comment. Their last financials list NET Intangibles & Goodwill at close to 29bn. Is this at all realistic in view of the huge amount of damage to their name as well as the actual value of the Company today. Forecasts by 2 US funds estimate current value at between $65 - 70/ per share.
Q: Wells Fargo put out a sell rating on Valeant Pharma today. Do you have access to the report or any thoughts on its contents? What Pharma stock would you recommend as a replacement for Valeant in my portfolio? Currently I have a half position of Concordia in my portfolio.
thanks 5i for your work
Don
thanks 5i for your work
Don
Q: Would it make sense to sell my position in VRX at this time and replace it with CXR Concordia at this time. As all news on VXR seems to be negative these days
Q: Hi
My holdings in VRX are near my purchase price after the bounce back from the short attack. I'm concerned about headwinds from the issues around the short and wonder if it would make sense to switch to one of CXR, CRH or GUD.Thanks Keith
My holdings in VRX are near my purchase price after the bounce back from the short attack. I'm concerned about headwinds from the issues around the short and wonder if it would make sense to switch to one of CXR, CRH or GUD.Thanks Keith
Q: Hi Peter and Team,
Considering Valiant's announced deal with Walgreens today, what is the Team's assessment of VRX going forward? I am currently up 10% on the stock and I am thinking of letting it ride for now. Your comments will be greatly appreciated.
Harry
Considering Valiant's announced deal with Walgreens today, what is the Team's assessment of VRX going forward? I am currently up 10% on the stock and I am thinking of letting it ride for now. Your comments will be greatly appreciated.
Harry
Q: In your opinion, is Valeant an outright "sell" at this time? It's going nowhere fast.
In your comment to Gary, on November 6th, you stated:
"The problem is that VRX is no longer trading on fundamentals, but on emotion and rumours. ... it is likely worth (worst case) $100 US. This is not our number, but from a good report from Mizuho Securities looking at worst case scenarios."
Given that the $100 US target price is not your number on the stock, would you nonetheless concur, or would you assess it higher/lower? (I know you don't believe in target prices, but at some point there is the essential value of the company that speaks out, and affirms its fundamental worth.)
For someone with a one-year time frame on this particular stock, do you think it's worth hanging on? I have a 28% loss and it is only 2% of my portfolio. I would like to recover that loss and move on, whether through Valeant or some other means.
(I have other, longer time frames on other parts of the portfolio, but was using this as my "Mad Money Corner".)
With everybody piling on Valeant, including lawsuits, shorters, staff desertions, things are looking pretty grim, and it's no longer possible to assess what is real and what is not.
Would this be a good time to take the "mad money" and run? You have lots of good choices in your growth portfolio, and I was considering turning to one of those.
Thanks, as always, for your great service!
In your comment to Gary, on November 6th, you stated:
"The problem is that VRX is no longer trading on fundamentals, but on emotion and rumours. ... it is likely worth (worst case) $100 US. This is not our number, but from a good report from Mizuho Securities looking at worst case scenarios."
Given that the $100 US target price is not your number on the stock, would you nonetheless concur, or would you assess it higher/lower? (I know you don't believe in target prices, but at some point there is the essential value of the company that speaks out, and affirms its fundamental worth.)
For someone with a one-year time frame on this particular stock, do you think it's worth hanging on? I have a 28% loss and it is only 2% of my portfolio. I would like to recover that loss and move on, whether through Valeant or some other means.
(I have other, longer time frames on other parts of the portfolio, but was using this as my "Mad Money Corner".)
With everybody piling on Valeant, including lawsuits, shorters, staff desertions, things are looking pretty grim, and it's no longer possible to assess what is real and what is not.
Would this be a good time to take the "mad money" and run? You have lots of good choices in your growth portfolio, and I was considering turning to one of those.
Thanks, as always, for your great service!
Q: I know this isn't a chat forum but I am intrigued by Saeed's question and wished to comment. Perhaps food for thought for some other members. I took a close look at Valeant also, because some of the selling was motivated by fear, and this can represent an opportunity. I chose to pass because:
1) I don't really understand how they are making the profits they report. They buy established companies with valuable products. OK. But what are they adding that allows them to earn so much more than the original owner? It is hard for me to believe that they can continue to grow this fast for very long. Anyhow, if I don't understand the business, I don't buy the shares.
2) VRX response to Citron, to me, was all bluster and obfuscation. VRX never came out and said in plain language that all their sales were absolutely legitimate. Instead they seemed to emphasize that their accounting was technically legal. And, by the way, whenever any organization delays giving answers but instead hires a team to "investigate" themselves....that is a sure sign they have been caught doing something wrong. It is a tactic to delay and hide the truth.
I hope for Saeed and others that VRX wrongdoing is only minor and that the core of the business is legit. Would be good for us all if it bounced back. I'll be on the sidelines though.
1) I don't really understand how they are making the profits they report. They buy established companies with valuable products. OK. But what are they adding that allows them to earn so much more than the original owner? It is hard for me to believe that they can continue to grow this fast for very long. Anyhow, if I don't understand the business, I don't buy the shares.
2) VRX response to Citron, to me, was all bluster and obfuscation. VRX never came out and said in plain language that all their sales were absolutely legitimate. Instead they seemed to emphasize that their accounting was technically legal. And, by the way, whenever any organization delays giving answers but instead hires a team to "investigate" themselves....that is a sure sign they have been caught doing something wrong. It is a tactic to delay and hide the truth.
I hope for Saeed and others that VRX wrongdoing is only minor and that the core of the business is legit. Would be good for us all if it bounced back. I'll be on the sidelines though.
Q: Hello team,
On Monday last week, I purchased a 10% position in Valeant. This was after seeing the videos on BNN on both side and also asking you a question about my decision to do this. I reasoned that I am a long-term investor and I would not touch this money for at least another 10 years. This has not changed. What has made me question my original decision however is the promise of new report that is even worse, further reveals Valeant’s accounting practices, and shall “nail” the company following their presentation last Monday. I didn’t think philidor story could carry that much weight in the end and that is why I bought in. Now, I think where this whole story is going to stop with a masterfully planned report releases to do maximum damage. Would that point be “beyond point of repair” for the company?
I know everything is possible and I know you cautioned me against too much weight here. I made the mistake and I learned my lesson. My question here is how much I have to pay for the lesson. I know that the additional loss on Friday was a response to the news for this Monday release and the damage is already in the stock again. What I am asking here is: should I look away and ignore all of this noise or should I at least try to lower my weighting and reduce my overall losses. I will be still holding the company if it happens to be around 10 years from now.
I think time is the only thing I have on my side as a retail investor. Andrew Left and other short sellers have made their money. Bill Ackman will make money by averaging down. And perhaps, I won’t lose money if I sit still and don’t react at all.
What do you think?
Having you guys at 5i cannot be appreciated enough during such times. Thank you!
On Monday last week, I purchased a 10% position in Valeant. This was after seeing the videos on BNN on both side and also asking you a question about my decision to do this. I reasoned that I am a long-term investor and I would not touch this money for at least another 10 years. This has not changed. What has made me question my original decision however is the promise of new report that is even worse, further reveals Valeant’s accounting practices, and shall “nail” the company following their presentation last Monday. I didn’t think philidor story could carry that much weight in the end and that is why I bought in. Now, I think where this whole story is going to stop with a masterfully planned report releases to do maximum damage. Would that point be “beyond point of repair” for the company?
I know everything is possible and I know you cautioned me against too much weight here. I made the mistake and I learned my lesson. My question here is how much I have to pay for the lesson. I know that the additional loss on Friday was a response to the news for this Monday release and the damage is already in the stock again. What I am asking here is: should I look away and ignore all of this noise or should I at least try to lower my weighting and reduce my overall losses. I will be still holding the company if it happens to be around 10 years from now.
I think time is the only thing I have on my side as a retail investor. Andrew Left and other short sellers have made their money. Bill Ackman will make money by averaging down. And perhaps, I won’t lose money if I sit still and don’t react at all.
What do you think?
Having you guys at 5i cannot be appreciated enough during such times. Thank you!
Q: For those who are considering buying Valeant, I recommend watching what a Rotman School of Business finance professor had to say about it today, on BNN. I attribute little weight to many guests that come on BNN, because of conflicts of interest, but Ramy is a professor who I have met and trust. His financial analysis methods are certainly modern and respected. What he said about EBITDA was also interesting/worrying considering how many BNN guests use it to back their ideas. dishttp://www.bnn.ca/Video/player.aspx?vid=736200
Q: This isn't a question, just another interesting tidbit regarding the VRX/Citron drama. Feel free to post if you like...
From Reuters: "Short interest in U.S.-traded Valeant Pharmaceuticals International Inc shares stood at its highest in nearly a year in the first half of October, exchange data showed on Monday, indicating bearish investors were stacking up against the stock even before a negative report torpedoed the shares last week.
Short interest in Valeant shot up to 10.54 million shares, or about 3.1 percent of the stock available for trading, in the period to Oct. 14, according to FactSet Research Systems data cited by the Wall Street Journal.
That was the highest since the last half of October 2014 and an increase of 49.3 percent from the 7.06 million shares, or 2 percent of the public float, at the end of September.
Overall short interest on NYSE stocks declined 2.2 percent during the same period, exchange data showed."
From Reuters: "Short interest in U.S.-traded Valeant Pharmaceuticals International Inc shares stood at its highest in nearly a year in the first half of October, exchange data showed on Monday, indicating bearish investors were stacking up against the stock even before a negative report torpedoed the shares last week.
Short interest in Valeant shot up to 10.54 million shares, or about 3.1 percent of the stock available for trading, in the period to Oct. 14, according to FactSet Research Systems data cited by the Wall Street Journal.
That was the highest since the last half of October 2014 and an increase of 49.3 percent from the 7.06 million shares, or 2 percent of the public float, at the end of September.
Overall short interest on NYSE stocks declined 2.2 percent during the same period, exchange data showed."
Q: What are your thoughts on the Valeant conference call? It seems like they refuted Citron's claims but the stock has been pretty neutral today. Any idea why that is/do you think their response was satisfactory?
Thanks!
Thanks!
Q: VRX isn't enjoying CRX's bounce. Is it facing stiffer headwinds because of direct accusations of fraud versus CRX's guilt by association, or do you think there's something else at work here e.g. it's business model needs to change, reducing profits going forward.
Bought CRX on the way down, is that trying to catch a falling knife or dollar cost averaging!! Average price $42, so fairly happy here, at least for the moment. Just wondering if there's an opportunity with VRX at this level or avoid altogether. My sector weight with CXR, GUD, PHM, PLI is 13%.
TGIF and thanks Peter.
Bought CRX on the way down, is that trying to catch a falling knife or dollar cost averaging!! Average price $42, so fairly happy here, at least for the moment. Just wondering if there's an opportunity with VRX at this level or avoid altogether. My sector weight with CXR, GUD, PHM, PLI is 13%.
TGIF and thanks Peter.
Q: I read the link to the Citron report provided here the other day and saw Mr Left on BNN yesterday. Bot the report and the interview revealed, im my opinion, were over-the-top to the point of being cartoonish. Citron's motives are obviously highly questionable. However, I can't help but think that Valeant doesn't own some responsibility for this. Why would Valeant not want to get out in front of this matter sooner? Why has Left done all the talking this week, while we have had so little info come from VRX?
The problem may very well be that Citron is correct in their accusation, and that VRX really wasn't sure what to say about it. It may be a small part of their overall sales, and the Enron comparison may be ridiculous, but it is possible that VRX got caught doing something wrong and can't refute it. That gave Citron a golden opportunity. Maybe we will learn more Monday. Just my 2 cents. Thx.
The problem may very well be that Citron is correct in their accusation, and that VRX really wasn't sure what to say about it. It may be a small part of their overall sales, and the Enron comparison may be ridiculous, but it is possible that VRX got caught doing something wrong and can't refute it. That gave Citron a golden opportunity. Maybe we will learn more Monday. Just my 2 cents. Thx.