Bought Valeant today...

[StuckinCT]

Only 100 shares at 36.50. Trading at less than 4x earnings. I've been watching it for a while and I usually don't make speculative purchases, but something tells me this is way oversold. With this much activism, and ample short term liquidity, I am betting they won't break covenants, or get a waiver. But 30 billion is a ton of debt, and these things have a way of feeding on themselves so only risking what I can kiss goodbye. Can Ackman really be this wrong

[Fedup]

He has been wrong before. Same with Einhorn.


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[Mulligan]

He has been wrong a lot lately...The Monkey throwing the darts at stocks the last 2 years has been laughing in his face... That being a said a bad company bought at the right price can make you more money sometimes than a great company bought at the wrong price.


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[dallas27]

Quote:

Originally Posted by StuckinCT Only 100 shares at 36.50. Trading at less than 4x earnings. I've been watching it for a while and I usually don't make speculative purchases, but something tells me this is way oversold. With this much activism, and ample short term liquidity, I am betting they won't break covenants, or get a waiver. But 30 billion is a ton of debt, and these things have a way of feeding on themselves so only risking what I can kiss goodbye. Can Ackman really be this wrong

You've got moxy. Best of luck.





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[Running_Man]

Quote:

Originally Posted by StuckinCT Only 100 shares at 36.50. Trading at less than 4x earnings. I've been watching it for a while and I usually don't make speculative purchases, but something tells me this is way oversold. With this much activism, and ample short term liquidity, I am betting they won't break covenants, or get a waiver. But 30 billion is a ton of debt, and these things have a way of feeding on themselves so only risking what I can kiss goodbye. Can Ackman really be this wrong

It is not trading at 4X earnings it is trading at 4X adjusted earnings which are the presentation that Valeant gives after excluding certain costs - like amortizations of patents and interest on debt, for regular old GAAP earnings - you know the kind that regulators require that is unknown because PWC will not approve the treatment to this point of what Valeant wants to do but the highest expected GAAP earnings are around $2 per share so you have a 18 PE which is a market multiple.

Yes he can be this wrong as he already is - his total investments in Valeant are 4.1 billion and his net worth is presently 400K. He actually sold puts at $60 when the stock was at $100 and those today are actually in the red for him and he is on the line to buy millions of shares @ 60 per share. So down 90 percent he is hoping to hit a home run on a miracle shot.

All I would say is that a company that owns a subsidiary and then doesn't disclose the inventory as at the subsidiary and instead shows as sales is not using proper accounting methods and every aspect of their accounting must be suspect. No financial analyst on Wall Street understands the corporate structure - they took Pearson at his word that it all made sense because he was supposed to be a financial genius when he is obviously only a flim flam artist. You combine that with not being able to issue a 10K and breaking debt covenants - right now they no longer have access to their credit line - and if they can't issue a 10K by April because of an investigation into irregularities of financial reporting and an SEC investigation and this is not an investment it is a lottery ticket purchase. They are jettisoning executives like fleas off a sick dog.

They reduced their sales estimate for 2016 by 10 percent in 2 weeks and then didn't have the same numbers on the web and on the press release. This means they must have been playing with numbers right up to the call and shows they have no control or understanding of their business. They are broken and will be sold off in pieces over the coming year, since they overpaid for the businesses most likely scenario is they go to zero, however if a miracle happens and the 10K is not as bad as seems likely and they get debt waivers and their pricing stabilize and they earn enough to begin paying down debt they may be able to increase their share price.

Also with no financial statements issued how does anyone know what their short term liquidity situation is with no access to a credit line? If they have to pay the debt they are going to be breaking covenants on in 4 weeks how will they pay that back? What is the advantage to the bond holders to give Valeant a waiver when the 15 percent of bonds with the waiver can be forced to be paid when they are trading at 75? You force Valeant to pay at $100 or take market of $75, seems like an easy decision to me. Taking the word of management that said earnings would be $16 no we mean $14 no we mean $12 no we mean 10 no wait that was a typo we mean $9 and trust us we only exclude expenses to give a clear picture of the company.

As you can see I am EXTREMELY dubious management is on the up and up and this is what you get when a hedge fund manager tries to run a drug company.

[Mulligan]

Quote:

Originally Posted by Running_Man It is not trading at 4X earnings it is trading at 4X adjusted earnings which are the presentation that Valeant gives after excluding certain costs - like amortizations of patents and interest on debt, for regular old GAAP earnings - you know the kind that regulators require that is unknown because PWC will not approve the treatment to this point of what Valeant wants to do but the highest expected GAAP earnings are around $2 per share so you have a 18 PE which is a market multiple. Yes he can be this wrong as he already is - his total investments in Valeant are 4.1 billion and his net worth is presently 400K. He actually sold puts at $60 when the stock was at $100 and those today are actually in the red for him and he is on the line to buy millions of shares @ 60 per share. All I would say is that a company that owns a subsidiary and then doesn't disclose the inventory as at the subsidiary and instead shows as sales is not using proper accounting methods and every aspect of their accounting must be suspect. You combine that with not being able to issue a 10K and breaking debt covenants - right now they no longer have access to their credit line - and if they can't issue a 10K by April because of an investigation into irregularities of financial reporting and an SEC investigation and this is not an investment it is a lottery ticket purchase. They are jettisoning executives like fleas off a sick dog. They reduced their sales estimate for 2016 by 10 percent in 2 weeks and then didn't have the same numbers on the web and on the press release. This means they must have been playing with numbers right up to the call and shows they have no control or understanding of their business. They are broken and will be sold off in pieces over the coming year, since they overpaid for the businesses most likely scenario is they go to zero, however if a miracle happens and the 10K is not as bad as seems likely and they get debt waivers and their pricing stabilize and they earn enough to begin paying down debt they may be able to increase their share price.

Your post reminds of people in income forums who are desperately searching for income yielders and go only by the fact "the company has to be safe and able to pay its dividends because it is profitable". Many of these people have been smoked chasing yield. Accounting is way more complicated than just earnings isnt it... And that is assuming it is accurate accounting. A company can be profitable and then instantly bankrupt or desperately needing immediate recapitalization.
Not being an expert, I tend to buy my meat and potatoes issues with safer companies due to the fact that I dont understand fine print in the appendices of the financial statements.
Back to OP, now....Hey its a small bet. Everyone has to have some fun, somehow. I don't do it much with stocks, but I do on sports bets.


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[lawman3966]

Quote:

Originally Posted by Running_Man Yes he can be this wrong as he already is - his total investments in Valeant are 4.1 billion and his net worth is presently 400K.

I don't know much about Valeant or about how to value that stock, but the above comment about Ackman's net worth got my attention.

The above states that is net worth is $400K? Google says he's worth $2.6 billion.
Were you referring to the remaining value of his investment in Valeant in millions?

[Fedup]

I doubt that he is worth $400k. That makes him one of us. LOL!
I'm glad I closed out my trade on Valeant, it's slightly bounce up.


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[Bir48die]

It's worth reading an article in last week's Bloomberg weekly.

[Running_Man]

Quote:

Originally Posted by lawman3966 I don't know much about Valeant or about how to value that stock, but the above comment about Ackman's net worth got my attention. The above states that is net worth is $400K? Google says he's worth $2.6 billion. Were you referring to the remaining value of his investment in Valeant in millions?

Yes this comment is in Pershing's Squares investment in Valeant, which was led by Ackman and doubled and tripled down by Ackman

[Fermion]

Why not buy Gilead instead? PE is around 7ish, loads of cash.

Bio is hurting right now and likely you can throw a dart at a large cap and come out a winner by EOY.

[NW-Bound]

Biotech has been beaten down so bad, I could not help myself and got some. I bought the ETF IBB which has all the big names. Lost 12% after 2 months. Been thinking about getting a bit more. Maybe I will sell a put instead.

[Fermion]

Quote:

Originally Posted by NW-Bound Biotech has been beaten down so bad, I could not help myself and got some. I bought the ETF IBB which has all the big names. Lost 12% after 2 months. Been thinking about getting a bit more. Maybe I will sell a put instead.

I just bought the IBB this morning at 244 and saw it drop more to 241...it is back to 243.xx

Quite the mover today...hopefully it moves up sometime.

[Fedup]

Valeant went down again today. I thought when I was holding the puts that this stock has a good chance of going to bankruptcy if creditors are after them. But apparently not with enough conviction that I sold them.


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[Fermion]

Valeant hit new low today.

Even the IBB is performing poorly with the regular market going back to near the all time highs. I sold my IBB yesterday at $248.30 and can't even make myself buy it again this morning at sub $245.

I guess the entire bio market is just scared.

[Running_Man]

I think what is being missed on much of the commentary is the risk of lawsuits. Most commentary focuses on cash flows and whether they can pay down debt but the risk of shareholder lawsuits due to deception and not reporting of Philidor which it appears they violated GAAP rules in order to avoid will bring lawsuits that alone can bankrupt the company. That is also why it would seem to me if they violated a covenant you would get your money as soon as possible because the assets are going to be fleeing this company quickly

[Fedup]

I'm shorting another biotech, it goes down the way Valeant going. Ibb is very volatile.


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[MRG]

I didn't realize my profit sharing fund held Valeant till today. Had been doing well, looks like that private fund is down over 30% from last year's high. Nice! I'd b*tched while I was still there that employees had no visibility into the funds holdings. I see now another former employees is suing Megacorp over the same issues. Oh crap, I was only going to be in that fund for 5 more months(till 59.5).

[erkevin]

Valeant is the largest holding in Sequoia (mutual fund). Sequoia used to be a 5-star fund and did amazingly well during the recovery. Well, due to VRX's abysmal performance and epic melt-down, you can guess what happened.
And yes, I hold a considerable amount of Sequoia and it is dragging my entire portfolio down.

[Slow But Steady]

Quote:

Originally Posted by erkevin Valeant is the largest holding in Sequoia (mutual fund). Sequoia used to be a 5-star fund and did amazingly well during the recovery. Well, due to VRX's abysmal performance and epic melt-down, you can guess what happened. And yes, I hold a considerable amount of Sequoia and it is dragging my entire portfolio down.

I do too. About three years worth of gains gone in the last 6 months. (That may not be exactly right, but I hate to go look again.)

VRX is down almost 10% again today, to below $27.