Question is why more deep value guys are selling. Another: Wally Weitz sold his stake. These are guys who are generally independent thinkers who probably have done as much research as Ackman has done.
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Valeant? VRX
- Thread starter NoVoodooHere
- Start date
Question is why more deep value guys are selling. Another: Wally Weitz sold his stake. These are guys who are generally independent thinkers who probably have done as much research as Ackman has done.
In my opinion, which is not worth much, I suppose, Left is indeed a short term catalyzer that covers into his reports but not a credible source; conversely the sophisticated investors involved are reliable. Pg 29+ shows some valuation work http://assets.pershingsquareholdings.com/2014/09/Investor-Call-re-Valeant-Pharmaceuticals.pdf,
...& I find that more reliable than a hissy fit from a neurotic individual.
You've combined a couple of logical fallacies there.
First of all an appeal to authority. It doesn't matter who wrote the Citron Research report - only its contents matter. Same goes for the Pershing Square report.
Second - "hissy fit from a neurotic individual", whatever issues you have with Andrew Left have nothing to do with the future performance VRX stock.
As much as the media would like you believe, this is not just about Citron Research's report. Have you read the reports from AZ_Value, Bronte Capital and Roddy Boyd?
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1. That's possible, but when a stock is in a panic people will get emotional and overestimate that chance of that happening. Furthermore a lawsuit that is not settled (your scenario) is likely to take even longer than one with a settlement (due appeals, etc). So we are talking about 4-5 years in the future. In the mean time the company will continue to produce cash
2a. IIRC VRX only did 2 acquisitions with stock over the last few years. Its not a major part of their business model. If you recall VRX didn't get AGN exactly because their stock was undervalued and they didn't want to raise their bid. Then someone else came in with the higher bid and got AGN
2b. This will happen. They lost 7% of revenue, but that is fine because they will find alternative ways to ship the drugs they were shipping with phillidor. Those ways won't be as agressive so they wont recoup it all and the growth rate of those revenues will be smaller but all these concerns are already taken care of by the valuation as of now. Thats what some shorts miss, they think they can keep bashing and it doesn't matter where the stock trades at.
The oversold technical position (along with the consensus bearishness) provides an extra return for the investment. No just the company looks good on a valuation basis, it also looks good due the likelyhood of a technical bounce. I'm not saying it will come from $93 (it could come from $81 back to $95) but on average its a good idea to fade extreme sentiment
Thanks for your thoughts Daal.
However I should add that my most successful VRX trades in the last two weeks were also related to a "technical bounce". After the stock went as low as 88.50, it made several trips back over $120. These provided excellent shorting opportunities. No fundamental analysis on my part - just a good place to short.
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I'm all for short-term trading the stock in both directions. In fact, I played both sides today as a daytrade today. Unfortunately the scoundrel citron released his bs right when the stock did an opening range breakout and that shook me out of a day trade long. But I got no issue with this sort of trading. long-term though, I think the shorts overreactedThanks for your thoughts Daal.
However I should add that my most successful VRX trades in the last two weeks were also related to a "technical bounce". After the stock went as low as 88.50, it made several trips back over $120. These provided excellent shorting opportunities. No fundamental analysis on my part - just a good place to short.
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"Logical Fallacy" LOL is that what you term something you disagree with? Good one.You've combined a couple of logical fallacies there.
First of all an appeal to authority. It doesn't matter who wrote the Citron Research report - only its contents matter. Same goes for the Pershing Square report.
Second - "hissy fit from a neurotic individual", whatever issues you have with Andrew Left have nothing to do with the future performance VRX stock.
As much as the media would like you believe, this is not just about Citron Research's report. Have you read the reports from AZ_Value, Bronte Capital and Roddy Boyd?
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The content of the Citron piece (no it is not really a report) is speculation, suggestion, unsubstantiated malicious accusations of wrong-doing for the sole purpose of creating a market fluctuation to cover into. But as far as content, there is nothing material. The issue I have with Left is that this is all smoke & mirrors (on his part). Don't believe me, just watch what happens in the next few years. Or by all means, short it! While he may have done some worthwhile work in the past, it seems evident that this was an attempt (successful) to use his persona to create panic, using the series of negative catalysts immediately preceding his attack to create an exaggerated panic. If you caught the CNBC interview today, he said that his initial attraction was the bad press surrounding the price increase issues. It seems overwhelmingly evident that he is engaged in a campaign of throwing you know what and seeing what sticks. This attack, if I am correct, will do more damage to Mr. Left's persona and ability to create future market fluctuations than any reward from the trade.
I understand your point regarding the other short sellers. I find it quite interesting that there is so much hatred for this company and its way of doing business, ergo perpetuating growth. A lot of critique or suspicion, from a forensic perspective so to speak, comparing VRX to Enron/Tyco is actually understandable to me, believe it or not, but IMO this will prove to be a monumental error of judgment for that thesis. Suffice it to say that if some accounting aspects are reminiscent of past fraudulent endeavors, that, in and of itself does not create causation - Only time will tell.
"Logical Fallacy" LOL is that what you term something you disagree with? Good one.
I understand your point regarding the other short sellers. I find it quite interesting that there is so much hatred for this company and its way of doing business, ergo perpetuating growth. A lot of critique or suspicion, from a forensic perspective so to speak, comparing VRX to Enron/Tyco is actually understandable to me, believe it or not, but IMO this will prove to be a monumental error of judgment for that thesis. Suffice it to say that if some accounting aspects are reminiscent of past fraudulent endeavors, that, in and of itself does not create causation - Only time will tell.
No, I described your logical fallacies (appeal to authority; personal attack on Andrew Left) and explained how they have nothing to do with the quality of his research. In fact, it's quite reminiscent of another poster's attack on Muddy Waters 2 years ago:
http://www.elitetrader.com/et/index...s-before-its-calls.279325/page-5#post-4202387
The poster in that thread was unable to provide reason(s) for disagreeing with Muddy Waters' report.
I have no position in VRX, but attacks on Andrew Left's character do not invalidate the content of any report he writes, just as attacks on Muddy Waters did not invalidate the content of their NQ report.
I don't think you directly answered my previous question: Have you read the reports from AZ_Value, Bronte Capital and Roddy Boyd? The analysis by Hempton and Boyd, in particular, is far more serious than the Citron report.
Also have you read the VRX report(s) by Propublica?
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No, I described your logical fallacies (appeal to authority; personal attack on Andrew Left) and explained how they have nothing to do with the quality of his research. In fact, it's quite reminiscent of another poster's attack on Muddy Waters 2 years ago:
http://www.elitetrader.com/et/index...s-before-its-calls.279325/page-5#post-4202387
The poster in that thread was unable to provide reason(s) for disagreeing with Muddy Waters' report.
OK you can ask me for my reasons for disagreeing with the "Citron report", but first, provide me with the reasons for agreeing with it. Thx in advance
You called me out correctly, I had not read those blogs & "research", and, now I have, so thank you for helping me to further inform myself.No, I described your logical fallacies (appeal to authority; personal attack on Andrew Left) and explained how they have nothing to do with the quality of his research. In fact, it's quite reminiscent of another poster's attack on Muddy Waters 2 years ago:
http://www.elitetrader.com/et/index...s-before-its-calls.279325/page-5#post-4202387
The poster in that thread was unable to provide reason(s) for disagreeing with Muddy Waters' report.
I have no position in VRX, but attacks on Andrew Left's character do not invalidate the content of any report he writes, just as attacks on Muddy Waters did not invalidate the content of their NQ report.
I don't think you directly answered my previous question: Have you read the reports from AZ_Value, Bronte Capital and Roddy Boyd? The analysis by Hempton and Boyd, in particular, is far more serious than the Citron report.
Also have you read the VRX report(s) by Propublica?
.
Now I call you out, sir. Your soft-spoken approach does appear to be the call of reason and I cannot speculate as to what your motivation may be in these posts as you claim no position. But is it the call of reason?
...Particularly with regard to "Bronte Capital" but regarding the lot of 'em: "appeal to authority" as you put it does matter when evaluating content - Who authored it, why, and what is the expertise/familiarity involved? The content is indeed frighting to a holder of the stock, if only it were credible. But put into context, it is a whole lot of poorly informed speculation, and it appears to me that these "outsiders" have no insight into what is happening behind the curtain, yet, they have much to say of it. On the other side I see some extremely well informed, competently staffed professional investors with (at least some level of) access to the company.
So some folks brought paper clips to a rocket launcher fight that they are instigating, I'm gonna go with the properly armed folks on this one. You may turn out to have been right w/ your skepticism, and those "sleuths" you refer to may turn out to have been right, only time will tell.
For everybody involved with this stock, keep in mind the following things. A key component of the bullish thesis of this stock is what management calls cash EPS, essentially operating cash flows with a lot of stuff added back because management thinks they are one time charges. The shorts and skeptics thinks management cannot be trusted and that cash EPS is not real, the bulls disagree. If the bulls are right, the stock is a big bargain here, its likely to go to $250+ or more over the coming years as the company uses that cash to delever the balance sheet, etc. If the shorts are right, expenses will keep reoccuring the cash EPS will be lower, maybe quite a bit lower than management thinks. If that happens its likely that the stock WILL go to $0 because management will lose all credibility and debt markets will get very nervous. It will be very hard to survive with high interest rates, high leverage and operating cash flows that are not that significant. On a GAAP basis the company would not be viable right now, on a non-GAAP basis (with cash EPS), the company is very strong and is well positioned to do great.
So do your homework and due dilligence and keep in mind the risks both for longs and shorts
So do your homework and due dilligence and keep in mind the risks both for longs and shorts
"The Valeant Collapse Goes Much Deeper" by Ophir Gottlieb
http://www.cmlviz.com/cmld3b/lite.php?number=1050&app=news&cml_article_id=20151105_VRX
Ophir Gottlieb's Opinion:
Valeant's entire mode of operation (acquire drug companies, slashing jobs, costs, and R&D and then raising drug prices) is over. Period. The company can no longer acquire any more companies nor can it raise prices.
Do you agree with his conclusion that VRX is essentially finished?
http://www.cmlviz.com/cmld3b/lite.php?number=1050&app=news&cml_article_id=20151105_VRX
Ophir Gottlieb's Opinion:
Valeant's entire mode of operation (acquire drug companies, slashing jobs, costs, and R&D and then raising drug prices) is over. Period. The company can no longer acquire any more companies nor can it raise prices.
Do you agree with his conclusion that VRX is essentially finished?
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