Recent events has shred more light on is likely to happen to VRX. The company has walked away from Philidor (which means they did illegal things in all likelyhood). Philidor will be potentially target from lawsuits (specially given they they are tied to a very politically unpopular Valeant and also those illegal things made the front page of the WSJ many days in a row). That liability MIGHT flow through Valeant or it might not but 2 points of my initial thesis have been shown to be breached. At this point it all comes down to how strong was the entity built to shield them from liabilities (and whether those liabilities will be big enough to kill VRX). At this point its too dangerous for me to continue in the stock so I plan to sell my PSH (ackman fund that has a lot of VRX exposure) into the pop he is likely to create today
Valeant? VRX
- Thread starter NoVoodooHere
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Recent events has shred more light on is likely to happen to VRX. The company has walked away from Philidor (which means they did illegal things in all likelyhood). Philidor will be potentially target from lawsuits (specially given they they are tied to a very politically unpopular Valeant and also those illegal things made the front page of the WSJ many days in a row). That liability MIGHT flow through Valeant or it might not but 2 points of my initial thesis have been shown to be breached. At this point it all comes down to how strong was the entity built to shield them from liabilities (and whether those liabilities will be big enough to kill VRX). At this point its too dangerous for me to continue in the stock so I plan to sell my PSH (ackman fund that has a lot of VRX exposure) into the pop he is likely to create today
I don't know that a "pop" will be created. I agree w/ you the Valeant story is getting ugly-er and is worrisome to a holder of PSH, however I point out that due to fall in share price of VRX the exposure of the fund on % basis is not what it once was, in other words, you've already taken bulk of loss from VRX, & selling PSH will make that a permanent economic loss. Also the Pershing strategy of concentration will invariably have some failures; so if you invest in the strategy you have to expect that from time to time. Just a few points on the matter in my opinion but of course your discipline and prudence trumps that. Perhaps I should do same but have decided to have a longer term outlook. Anyways, it will be interesting to see what this call consists of.
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If you plan to hold the fund for the long-term you are probably going to be fine. Its just that strategically it makes sense to me for get out, barring any major surprise from Ackman
i think funds will short this just to dilute bill ackman
Here are the slides which to me has pretty much destroyed the short argument (unless you are talking about a day trade)
To me the key phrase no one is talking about is the 'Valeant is notably absent from this list'. Essentially you have all these shaddy pharma companies doing bad stuff over and over again but no one talks about it. But when Valeant did, the entire world has blown the issue out of proportion. Yet, the fact shows that Valeant is actually one of the least corrupt companies. You have all these companies having issues with safey disclosures, we are talking about stuff that might kill people. That's not what Valeant did. If anything, they are actually trustworthy compared to the rest. The media and the shorts have blown the problem out of proportion and this lead to a large mispricing in the stock price. VRX can handle pretty much any fine that is thrown at it using its liquidity, cash flow generation and $1.5B credit revolver
I plan to buy the stock monday unless the shorts come out with something REALLY strong
To me the key phrase no one is talking about is the 'Valeant is notably absent from this list'. Essentially you have all these shaddy pharma companies doing bad stuff over and over again but no one talks about it. But when Valeant did, the entire world has blown the issue out of proportion. Yet, the fact shows that Valeant is actually one of the least corrupt companies. You have all these companies having issues with safey disclosures, we are talking about stuff that might kill people. That's not what Valeant did. If anything, they are actually trustworthy compared to the rest. The media and the shorts have blown the problem out of proportion and this lead to a large mispricing in the stock price. VRX can handle pretty much any fine that is thrown at it using its liquidity, cash flow generation and $1.5B credit revolver
I plan to buy the stock monday unless the shorts come out with something REALLY strong
My only counter argument would be that Valeant was a pip-squeak company during the time period of this study. So the numbers could be misleading. I agree with your general thesis and I'm buying delta, mostly through selling puts because the vol is bananas and I don't expect the stock to rip up anytime soon.