Bought Valeant today...

[ownyourfuture]

You appear to have contracted CAFK disease.
I've also contracted this disease in the past.

The most common symptom is an individual investor, looking at a stock chart of a stock that was recently much, much higher.

The investor says to himself, how could this stock that as recently as a year ago was selling for $250 a share, only be selling at 36.00 ?

Those sellers must be really stupid, I'm gonna start buying.

Forgive me, I just couldn't help myself, as it is April 1st today.
CAFK stands for 'Catch A Falling Knife'

As mentioned above, I have been afflicted with this disease myself in the past. The most recent was Bank of America in 2009. I believe it's about $13 a share right now, and would have to get to around $25 a share for me to break even.

Again, nothing personal. I hope it works out for you in the long run.

 

[Fedup]

I can't believe these hedge fund guys can't be so wrong. I remember Einhorn was into Sun Edison and now it's less than a dollar. I was following the whales for a while, not any more.


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[Gumby]

You appear to have contracted CAFK disease.
I've also contracted this disease in the past.

The most common symptom is an individual investor, looking at a stock chart of a stock that was recently much, much higher.

The investor says to himself, how could this stock that as recently as a year ago was selling for $250 a share, only be selling at 36.00 ?

Those sellers must be really stupid, I'm gonna start buying.

Forgive me, I just couldn't help myself, as it is April 1st today.
CAFK stands for 'Catch A Falling Knife'

As mentioned above, I have been afflicted with this disease myself in the past. The most recent was Bank of America in 2009. I believe it's about $13 a share right now, and would have to get to around $25 a share for me to break even.

Again, nothing personal. I hope it works out for you in the long run.

My "Catch a Falling Knife" buy was San Juan Basin Royalty Trust (SJT) this past November 10th at $6.90/share. It had had already fallen about 70% over the prior year, and I thought to myself "How much worse could it get? It's natural gas. What OPEC does or doesn't do about crude oil is irrelevant to natural gas. The health of the economy is what drives NG and that is improving slowly but surely." Well, SJT closed at $5.11 today. It flirted with sub $4.00 levels. An investing genius, I am not.

 

[Totoro]

My knife was made of steel. Arcelormittal.

Went from 99 down to 20 or so. That's when I started buying. Kept buying on the continued fall downwards, because hey, the P/B is now 0.3 and the world needs steel. Sure the China boom is over, but they produce and sell in Europe and the US. They will survive. Several value investors also were in steel (POSCO mainly, but still).

My average buy price is around 10.

Well, it kept dropping all the way down to 3, especially from may 2015 onwards, thanks to China dumping excess steel everywhere.. Now it's at 4.8 and owners got diluted this month.

I did participate in the issue, and haven't sold a single share. Still haven't learned my lesson I guess.

 

[Running_Man]

As for falling knives, I note there is a big salesman of knives,
Just a little over a year ago, Cramer got Valeant about as wrong as he could as he recommended right at $215 per share after not liking it until that point, bragging about how great Mike Pearson is as a CEO

The fastest growing major pharma is headed higher

At about the same time ---about a month later-- he extolled what a great company SunEdison was and how it was rolling up companies in a cost containing mode.

https://www.google.com/finance?q=NYSE%3ASUNE&ei=rdUCV4iDDMP02AbI5KiABQ

What did these have in common? Strong hedge fund ownership, which seems like it is likely they were pushing Cramer to get good pub on CNBC. SunEdison is now filing for bankruptcy and Valeant is probably not too far behind should find out soon as creditors are not going along per Bloomberg report with signing off on no 10K.

 

[haha]

My "Catch a Falling Knife" buy was San Juan Basin Royalty Trust (SJT) this past November 10th at $6.90/share. It had had already fallen about 70% over the prior year, and I thought to myself "How much worse could it get? It's natural gas. What OPEC does or doesn't do about crude oil is irrelevant to natural gas. The health of the economy is what drives NG and that is improving slowly but surely." Well, SJT closed at $5.11 today. It flirted with sub $4.00 levels. An investing genius, I am not.

But it can't go broke. There is no debt, and none allowed. it is close to having a call on natural gas, at least natural gas in the San Juan Basin.
I own it too, at a higher price than you. I would be amazed if it does not work out. They haven't abolished cold winters, have they?

And the oil price does affect natural gas, in that a lot of gas is produced when the tight oil that all these frackers are producing gets produced. Even when the target is crude oil, in many plays there is associated gas.

Ha

 

[Running_Man]

But it can't go broke. There is no debt, and none allowed. it is close to having a call on natural gas, at least natural gas in the San Juan Basin.
I own it too, at a higher price than you. I would be amazed if it does not work out. They haven't abolished cold winters, have they?

And the oil price does affect natural gas, in that a lot of gas is produced when the tight oil that all these frackers are producing gets produced. Even when the target is crude oil, in many plays there is associated gas.

Ha

If Burlington goes under the trust goes under : from the Trust 10K

The value of the Royalty and the Trust’s ultimate cash available for distribution is highly dependent on the financial condition of the operator of the wells. Neither Burlington nor any of the other operators of the Underlying Properties has agreed with the Trust to maintain a certain net worth or to be restricted by other similar covenants.
The ability to operate the Underlying Properties depends on all operators’ future financial condition and economic performance and access to capital, which in turn will depend upon the supply and demand for oil and natural gas, prevailing economic conditions and financial, business and other factors, many of which are beyond the control of such operators.

 

[Fermion]

My falling knife was FCX. I bought in at $25 but sold at $19 for a loss. I then shorted it at $13 but chickened out only to see it fall to $4 very soon after.

Now Buffett buys into it, but I think the old fart is wrong this time. Still, that was enough to bring it back near $10, so for those who bought at $4, they have some profit.

 

[Fedup]

As for falling knives, I note there is a big salesman of knives,
Just a little over a year ago, Cramer got Valeant about as wrong as he could as he recommended right at $215 per share after not liking it until that point, bragging about how great Mike Pearson is as a CEO

The fastest growing major pharma is headed higher

At about the same time ---about a month later-- he extolled what a great company SunEdison was and how it was rolling up companies in a cost containing mode.

https://www.google.com/finance?q=NYSE:SUNE&ei=rdUCV4iDDMP02AbI5KiABQ

What did these have in common? Strong hedge fund ownership, which seems like it is likely they were pushing Cramer to get good pub on CNBC. SunEdison is now filing for bankruptcy and Valeant is probably not too far behind should find out soon as creditors are not going along per Bloomberg report with signing off on no 10K.

And don't forget CMG. Cramer still peddling CMG after it's down nearly half the value. If anything you want to use Cramer as a short term indicator or as a long term contrarian indicator.


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[erkevin]

Valeant has been absolutely bananas over the past couple of weeks. Up or down 5% daily.
Up 10% right now.

 

[Running_Man]

With no financial statements that are of any use for over 2 years and no real news on what the company is doing there is only wild speculation with much of it coming from hedge funds that have gotten killed in the stock.

Most sane thing I saw was from Deutche Bank which said if you value businesses at what Valiant paid company is worth $36, a 10% drop in value of purchases results in value of $18, so the biggest question is did Valeant add true value to any of these companies with no R&D or were they wasting assets with a slow drop in value over time. But valuing this company with a CEO that is being forced out, it’s CFO fired and former CFO asked to step down from board for forging results and refusing no replacement yet on board, this is a freak show for an S&P500 company.

 

[Sunset]

With no financial statements that are of any use for over 2 years and no real news on what the company is doing there is only wild speculation with much of it coming from hedge funds that have gotten killed in the stock.

Most sane thing I saw was from Deutche Bank which said if you value businesses at what Valiant paid company is worth $36, a 10% drop in value of purchases results in value of $18, so the biggest question is did Valeant add true value to any of these companies with no R&D or were they wasting assets with a slow drop in value over time. But valuing this company with a CEO that is being forced out, it’s CFO fired and former CFO asked to step down from board for forging results and refusing no replacement yet on board, this is a freak show for an S&P500 company.

Not too surprising as Quebec has a large issue with corruption.

 

[haha]

If Burlington goes under the trust goes under : from the Trust 10K

I assume you mean that SJT would enter bankruptcy. Since the trust has no liabilities other than current payments out of cash received, I think that the trust cannot enter bankruptcy. Clearly the operator has some rights wrt the operated royalty so I do not know what might happen in the event of an operator bankruptcy. But the royalty burden on the properties would not disappear, and unless the properties are no longer economic, they would be produced by some entity and this production would be burdened by the royalty interests. I would have to research this. In any case, since Burlington is a wholly owned subsidiary of Conoco Phillips, bankruptcy seems a remote possibility.

What is not remote, is that under conditions of very low prices, and likely other cheaper sources of gas such as the Marcellus, production might slow because drilling and workovers will slow. I think there were several times during the past 18 months that there was no money to distribute. But the royalties are a burden on production from the properties, and not merely a contract between Burlington and the trust. At least as I understand it, Burlington is not a counter-party in the usual sense. There is likely no area of America business with better developed law regarding various distributed economic interests in properties.

Oil and gas investing is inherently risky, and I think that this royalty is less likely to cause me lasting harm than a whole lot of other possibilities.

As you know, investing cannot be made "safe", beyond US treasury bills. For many years of retirement I have accepted this. In the past I have made opportunistic investments in SJT and PBT, and smaller investments in other royalty trusts. They were always very profitable, though I realize that this has little to do with today's investment. For one thing, it is clear that God hasn't been making new deposits to replace gas that has already been produced from these properties, so sometime the resource will be fully depleted given continued opportunities to sell the gas profitably.

I am down almost 50% on this moderate sized position. It is not large in my portfolio context. However I clearly am strongly in favor of higher gas prices, and production economics that will be favorable to the operator.

Ha

 

[haha]

My falling knife was FCX. I bought in at $25 but sold at $19 for a loss. I then shorted it at $13 but chickened out only to see it fall to $4 very soon after.

Now Buffett buys into it, but I think the old fart is wrong this time. Still, that was enough to bring it back near $10, so for those who bought at $4, they have some profit.

I know Carl Icahn is a holder, but I cannot find a reference to Buffett's ownership.

Can you give me one?

Ha

 

[Fermion]

I know Carl Icahn is a holder, but I cannot find a reference to Buffett's ownership.

Can you give me one?

Ha

I was mistaken, it was Icahn, you are right. I think Buffett bought into Phillips or something and I was misremembering who was in what.

 

[haha]

I was mistaken, it was Icahn, you are right. I think Buffett bought into Phillips or something and I was misremembering who was in what.

Thanks Fermion.

Ha

 

[OrcasIslandBound]

down

Bond investor isn't happy with Valeant. Down 6% today after hours.

 

[OrcasIslandBound]

When I posted that last post, Valeant was $29.90 now it is less than $22



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[StuckinCT]

When I posted that last post, Valeant was $29.90 now it is less than $22



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I'm not really worried about it. Wrote a 50$ strike call some time ago and took in $5 so cost only $31, it is way undervalued especially if broken up. Papas the CEO bought $5mm of stock recently, it will come back once headline risk goes away, bet I still make money on my 100 shares.