We don't know what the SEC investigation is for. It is likely related to Philibor and revenue recognition. But that's just a guess. Sales looks softer by 2%, which is not a terrible thing.
VRX restating earnings...BLATANT frontrunning
- Thread starter Clubber Lang
- Start date
The SEC investigation was obvious that it was going to happen. Cutting guidance is bad but it depends on what the reason is and what the new guidance is. Scheduling the CC and then cancelling is irrelavant, im sure they will do something of that kind soon. Pearson coming back is good, in frauds the executives get out for 'personal reasons' and never come back. Him coming back is not consistent with behavior of fradulent or failing companies. It all comes down to what happens to cashflows over the next 1-2 years. Pershing square is far better staffed and advised then Bronte Capital (and that showed when Bronte claimed Philidor could cost VRX $10B and PSQ showed that largest settlement in the history of healthcare was $3B, pure amateur hour by Hempton), and they projected that cashflows will be suficient to service debt and delever. Odds favor the bull side in my view. Its a high risk high reward sort of play, not to the easily scared
how is that trade working out for you and D. Hey...its a good trade, citron covered last week
you two make a great team
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Not great so far. I'm down about 1% on my account on the position since inception. But my thesis isn't broken yet.
I thought it was interesting that Citron, a publication that didn't let up on QCOR and other stocks publicly stopped publishing on VRX after their first report. They must realize there is a bull case here. (and btw - they were wrong on QCOR).
I like how you waited to post after the stock closed at 61. Why the silence when the stock was at 69? Let me guess if the stock rallies to 75 next week you won't say anything but if it sells off to 50, you'll be quick to post again.
I'm always surprised that a guy whose a generation older than me acts like a 14 year old troll.
I have been following the VRX debacle from the sidelines, fascinated by the stories. why anyone would invest in this company is absolutely beyond me. There is just no "margin of safety" whatsoever and therefore no edge.
On an unrelated note, I would highly recommend Aswath Damodaran's take on VRX.
On an unrelated note, I would highly recommend Aswath Damodaran's take on VRX.
Damodaran made numerous mistakes in his analysis which reflected his lack of due diligence
Also, even by the Damoradan's take, the stock is a buy now. But more importantly, if you plug different assumptions in his model, the final valuation comes at a drasticly different price. Why give more credence to his DCF assumptions given that he makes his living selling books and giving classes while dissing Bill Ackman's assumptions while has beaten the market by over 1000 basis points for over 20 years? Mathematically, its far more likely Ackman is correct. I'm not saying one should follow the lead of market beaters bindly but if forced to make a choice between which 'camp' to be in, it simply doesn't make sense to be on the former, even if the latter has annoyed you in certain instances
Well, it's obvious, innit? You give more credence to Damodaran for the same exact reason that you have cited. He makes his living selling books and giving classes, i.e. he's not involved in the securities that he's analyzing most of the time. That means that, unlike someone who's in the trade, he's likely to be a lot less biased. Obviously, as you suggest, you balance that against experience, track record and all those other wonderful things.
At any rate, my point was simply that, at least to my untrained eye, there's just too many "unknown unknowns" and too little "margin of safety" in this particular case. Maybe it's good enough for Ackman, I dunno. What I do find difficult to understand is how a fund like Sequoia be so involved, given all the things that they have publicly said.
Ouch...