Thanks man. Win or lose I just want to keep it real. We can all learn together and make more money in the future as a result. This EU QE rally delivered a great lesson for all of us, you got to chase the rally and hold. I didn't do that and we can all learn from that for the future. Dalio says at some point the Fed will do QE4, when it does we should go long big time and hold for 2-3 days. I will do that next time
Global Macro Trading Journal
- Thread starter Daal
- Start date
IB. Symbol is PSH, it trades on Amsterdam. He makes some mistakes sometimes but over the long-term he has had a very high sucess rate in his investments (from the top of my head he only messed up TGT JCP and maybe HLF). 20% compounded since inception versus something like 8% with few losers. From the media you would think the guy is clueless but if you look at the numbers he is one of the best pickers around.
Now, maybe he screwed up on VRX but I wouldn't rush to the conclusion. The short seller report last week was a complete joke. The guy called the company a Enron because it was booking revenue when it sold to the specialiaty pharma companies. VRX come out and said they did no such thing. The short then said 'its not my job to prove anything, look at the market reaction, looks like im right to raise questions'. circular logic anyone? he was the one who created the problem in the first place.
I believe is likely he will continue to beat the S&P500 over the long-term. Now, i'm not so excited about the S&P500 return which is why I'm not going all-in PSH. But usually, im so underweight equities that I have to buy some stuff every once and a while otherwise I miss out on the diversification benefits of fixed income/stock mix
im shorting some Jan Fed futures contracts. I think they Fed will be hawkish this week. This is mainly a hedge for my 10y bond position. I think they will be hawkish because the main elements that lead to no hike in September are no longer there (stocks weak, inflation weak). Stocks are back and the last cpi report was higher than expected. I think the surprise could be to the hawkish side
It wasn't just Citron. There were also other (better) reports from Bronte Capital, SIRF Report and AZ_Value.
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Yes, they were better reports. What they lacked was any kind of valuation of the stock as a result of their allegations. They also lack any kind of experience in law to be able to asses what they were complaning about. Meanwhile, VRX has hired outside firms in addition to its own lawyers to make sure what they did was legal. I'm not saying this is a slam dunk long here but it looks to me that if the short case works out, it will be due luck. Its just doesn't look like a good short setup after such big drop
The lawyers could say that it's legal, but what if a US regulator and/or Canadian regulator and/or the DOJ disagrees?
Bronte says
http://brontecapital.blogspot.com.au/2015/10/simple-proof-that-philidor-has-shipped.html
that this is mail fraud:
"And because it is against an insurance company (a finacial institution) the monetary penalty is up to $1 million per instance. And each instance is separate and fines are cumulative."
So if found guilty, and the fine was imposed as $1 million per instance, VRX would likely be worth zero.
If the short case works out, I don't think it will be luck. Much of the press attention (and the VRX conference call this morning) has dealt with the accounting angle. However the possible mail fraud / possible insurance fraud is probably most damning aspect. People like Bronte Capital are aware of this.
Also, Bronte Capital (and others) have been questioning VRX's multiple acquisitions for over a year, and questioning if the one-time losses are actually abnormal. Regardless of whether the losses are abnormal or not, the decline in the share price will make it difficult for the company to continue to grow its earnings by way of acquisition.
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Bronte says
http://brontecapital.blogspot.com.au/2015/10/simple-proof-that-philidor-has-shipped.html
that this is mail fraud:
"And because it is against an insurance company (a finacial institution) the monetary penalty is up to $1 million per instance. And each instance is separate and fines are cumulative."
So if found guilty, and the fine was imposed as $1 million per instance, VRX would likely be worth zero.
If the short case works out, I don't think it will be luck. Much of the press attention (and the VRX conference call this morning) has dealt with the accounting angle. However the possible mail fraud / possible insurance fraud is probably most damning aspect. People like Bronte Capital are aware of this.
Also, Bronte Capital (and others) have been questioning VRX's multiple acquisitions for over a year, and questioning if the one-time losses are actually abnormal. Regardless of whether the losses are abnormal or not, the decline in the share price will make it difficult for the company to continue to grow its earnings by way of acquisition.
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As I said in the other thread, you need three events for that to happen
-They did something illegal even though they are lawyered up
-They get a huge fine
-Limited liability (one of the key compoenents of US capitalism) does not work and they are forced to pay for Phillidor even though the lawyers built a structure to keep them away from any liability
You put these 3 together and it should be a low chance event they all happen
And the bronte guy, well. half the stuff he posts he sounds brillant and the other half he sounds like a total idiot. I remember back in the day (2008) I argued via email back and forth that Washinton Mutal was going bust (he was long the sub debt), he kept saying I was wrong. Same thing happened with FNMA. They both went bust. Maybe, he is right this time but I doubt. He's got no US legal expertise to be able to even know what is going on