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Global Macro Trading Journal
- Thread starter Daal
- Start date
I question how much work has had done analysing the company. I bet he is making the mistake of confusing gross price increase with net price increase. Net price increases were much lower than gross
It's possible. Ackman mentioned that he has spoken to Munger about it, but he didn't comment on Mungers specific qualms. My only concern would be that Sequioa and other deep value investors either are friends or are disciples of Munger/Buffet. So it makes it harder for a deep value guy to go against the view.
Munger did say that Valeant is a very Buffet-esque company: no glitz of a typical biotech pharma.
I am also long through short upside puts and some stock.
Munger is a great investor, however, ins't the success of Berkshire, according to Buffett, largely been driven by buying companies with big moats who have pricing power? So by definition they want companies who can raise prices more than their competitors. As I said before, if someone have studies who can prove that raising prices in sectors that a price inelastic (like healthcare) at will, increase their profits and then decrease those prices when the inelasticity starts to lose its effect. And that this is strategy is sustainable in the long-term (hard to be copied by others and hence monopolistic in nature), then the government definetly needs to ban it. Its not the job of VRX to do that though, they are playing by the rules
If anything, the outcry against that shows that the strategy is not sustainable. There is the loss of brand value associated with the strategy (which can be calculated down to a monetary value). That loss of brand value (both of the company and its products) and popularity is an extra cost associated with the strategy which decreases its profits. Thats why VRX and many others are backing down from that, as they should.
Munger is a great investor, however, ins't the success of Berkshire, according to Buffett, largely been driven by buying companies with big moats who have pricing power? So by definition they want companies who can raise prices more than their competitors.
Ha. that is very true.
If anything, the outcry against that shows that the strategy is not sustainable. There is the loss of brand value associated with the strategy (which can be calculated down to a monetary value). That loss of brand value (both of the company and its products) and popularity is an extra cost associated with the strategy which decreases its profits. Thats why VRX and many others are backing down from that, as they should.
The valeant brand name is meaningless - the drug brand names are what matter. And that hasn't changed.
It looks like Citron is admitting they are wrong in their Enron claims by saying this is their last report.
Another thing with VRX is that because I'm a day trader, if some news comes out intraday (or even when the markets are closed), I'm likely to short the stock as a hedge or even take a directional short on it. So this makes the stock a bit less risky to me because I can protect myself if things change. I don't want people getting in and them getting hurt when they don't react to an event so keep that in mind.
I'm likely to reduce my VRX today if the stock opens up. I'm finding myself taking too much time of my day to research this stuff again. If I take this down from 4% to 2%, I believe I will be able to ignore the noise and hold it more. Its a very volatile stock anyway, so its probably more appropriate
I also plan to buy the brazilian stock index position I mentioned earlier. Initially a 2% position and I will scale into all the to 5%
I also plan to buy the brazilian stock index position I mentioned earlier. Initially a 2% position and I will scale into all the to 5%