**OFFICIAL** Trading and Investing Thread- Part -IX-

[White-Belt]

http://www.nytimes.com/2016/03/30/bu...ries.html?_r=0


Decent article on VRX. Finally, someone points out how undervalued this company is. Negative sentiment is so overdone...

Maybe.

He did miss out the biggest thing of all though, which is that if the company is recording real running costs by lumping it in with one time cost of acquisitions then the EBITDA is bogus and the sum worth of the article is zero - Philidor isn't even a big issue. Other things to which I can't be bothered pointing out because I don't care.

You are only posting this stuff for yourself now, you have been forced to defend your position, I wonder if this position was 5% of your account would you still be holding. I reckon you probably would have ate the loss and moved on.

I have no money on this I could care less if it was at 200$ or 0$.

[yabrahbob]

what do you guys think about PNPL?

[ceizer1985]

Itching to get back into the market but nothing is really jumping out right now.

[woodbarry]

Ifitness there is a reason I jumped in & out of that option trade so fast. I did dam near the same thing with Walmart options back when they were bouncing between 55 a share and 60 w/ options for 65. After a couple of agonizing months I managed to get out with something like a 30$ profit and was happy to break even. For whatever reason my brain is wired to try and see the value of a company that suffers big down turns(almost did it with gopro@20 too). There is a reason I am not gonna try and play that game anymore cuz. The fact that I nearly went ballz deep on VRX alone makes me concerned.

Also, from my experience in the pharmacy industry Benefit Managers tend to get really upset when companies hike prices. Which means the insurance companies stop paying for it and tell patients/prescribers to get on a similar medication. As far as I recall Valeant doesn't have anything groundbreaking therapeutically that puts it in a class of it's own or makes it stand out significantly beyond what the competitors offer. That said, while I think revenues and profits will drop I still think that it has value significantly beyond what it is currently worth. Worst comes to worst I think they can sell of some bits & pieces and they will survive. If it gets down closer to $20 it will be hard for me not to try again and go long either buying stock or finding deep(leap) OTM calls for 2017.

[Num3n]

http://www.nytimes.com/2016/03/30/bu...ries.html?_r=0


Decent article on VRX. Finally, someone points out how undervalued this company is. Negative sentiment is so overdone...

really good link. Reps, I enjoyed how it went over the main issues people have with the stock and their legitimacy.

I am really considering buying some valeant. I'm wondering what the chances are that they actually need to sell off parts of the company to keep afloat?

[Barn01]

My thoughts on VRX haven't changed. As yourself today, right now, this moment, if VRX is the BEST deal you can find if you had no stock in it and held no losing remorse towards it. If you can HONESTLY say it's the best deal on the market right now yielding the lowest risk:reward then by all means ... fill your boots. However if you think there's a better option to play then put new money there to reduce risk, sell your holdings or reduce them and move money there to diversify, or sell all holdings and move into the other stock entirely.

If you had zero holdings .... what would you buy RIGHT NOW, how much of each (% of port) and why?

Be a damn robot. The market doesn't give a damn about you. Stocks owe you nothing. Treat them for what they are. You buy a stock in hopes that all future buyers (until you sell) will see more value in ownership than you did. That's it, that's all. Don't bother thinking, If I bought the whole company blah blah. You aren't and you won't, you are buying a small piece and may or may not hold an insignificant voting right that essentially is meaningless.

Ok rant over, and that wasn't meant to be completely directed towards VRX. I don't know enough about the company to honestly try and put buy or sell rec out there.

[ifitness1]

really good link. Reps, I enjoyed how it went over the main issues people have with the stock and their legitimacy.

I am really considering buying some valeant. I'm wondering what the chances are that they actually need to sell off parts of the company to keep afloat?

Not a matter of keeping the company afloat, but they have a few declining business that would be good to off-load now especially if they can get some premium on them. The cash would also raise some positive sentiment, aside from paying down debt. The derm business needs to go, followed by parts of neurology, and then B&L if necessary or they can get a really good premium for that business. I don't want to fill up this thread with too much VRX stuff, because I know people are sick of it :P So feel free to PM me if you want more granular info.

EDIT: I don't like looking at daily movement all the time like this, but this movement is deadly to my soul

[Num3n]

My thoughts on VRX haven't changed. As yourself today, right now, this moment, if VRX is the BEST deal you can find if you had no stock in it and held no losing remorse towards it. If you can HONESTLY say it's the best deal on the market right now yielding the lowest risk:reward then by all means ... fill your boots. However if you think there's a better option to play then put new money there to reduce risk, sell your holdings or reduce them and move money there to diversify, or sell all holdings and move into the other stock entirely.

If you had zero holdings .... what would you buy RIGHT NOW, how much of each (% of port) and why?

Be a damn robot. The market doesn't give a damn about you. Stocks owe you nothing. Treat them for what they are. You buy a stock in hopes that all future buyers (until you sell) will see more value in ownership than you did. That's it, that's all. Don't bother thinking, If I bought the whole company blah blah. You aren't and you won't, you are buying a small piece and may or may not hold an insignificant voting right that essentially is meaningless.

Ok rant over, and that wasn't meant to be completely directed towards VRX. I don't know enough about the company to honestly try and put buy or sell rec out there.

good post (i know i added a lot to the conversation with this lol)

[White-Belt]

https://m.youtube.com/watch?v=ZMbhze...ature=youtu.be

Tesla presentation

[woodbarry]

Not a matter of keeping the company afloat, but they have a few declining business that would be good to off-load now especially if they can get some premium on them. The cash would also raise some positive sentiment, aside from paying down debt. The derm business needs to go, followed by parts of neurology, and then B&L if necessary or they can get a really good premium for that business. I don't want to fill up this thread with too much VRX stuff, because I know people are sick of it :P So feel free to PM me if you want more granular info.

EDIT: I don't like looking at daily movement all the time like this, but this movement is deadly to my soul

Lmao, no offense m8, but that is kinda what happens when you put so much in one company(the stress not the big loser). Honestly I really think anyone could jump in at these prices and end up with a 3x profit in a year's time. As soon as they get their report out or even if they just get the OK from the bond holders they will probably gain 10$ right there. I doubt it was overvalued 10x when it was trading for $200+.

But for real why is it taking so long to get a corrected report? Is it common for something like this to take awhile if I was Ackman trying to save face I would have people doing the accouting chit 24/7 till the report was fixed. I don't understand how that can take months to do?

[White-Belt]

Ackman is now on the board of vrx, he will now presumably have inside info - trouble is he can't trade that info for 12 days. He cannot buy nor can he sell.

One thing for sure is, as an activist investor he will pump his position no matter what.

I also understand vrx has asked for a delay in publishing their report. If granted I believe that would constitute a technical default on some of their debt - correct me if I am wrong. Personally I don't think a technical default is a big deal.

[naeDBrah]

Not a matter of keeping the company afloat, but they have a few declining business that would be good to off-load now especially if they can get some premium on them. The cash would also raise some positive sentiment, aside from paying down debt. The derm business needs to go, followed by parts of neurology, and then B&L if necessary or they can get a really good premium for that business. I don't want to fill up this thread with too much VRX stuff, because I know people are sick of it :P So feel free to PM me if you want more granular info.

EDIT: I don't like looking at daily movement all the time like this, but this movement is deadly to my soul

I don't think anybody minds commentary on VRX. However, I have to ask you a few questions:

Why would VRX be able to sell businesses - where fundamentals are deteriorating - at a "premium," as you suggest? Keep in mind, they will be forced sellers and the valuations that these assets will command will be a few turns below precedent transactions/market multiples.

Let's revisit VRX' acquisitive business model:
Acquire underpriced drugs/portfolios/assets with an eye towards synergies. The synergies typically came from aggressive cost cutting and "repricing." Often times, costs are cut too aggressively impacting the top-line of the acquired assets. Medicis ('12) is a great example of this, B&L, too. Look at glassdoor (lol), I can also post some "on-the-ground" research to substantiate these claims, if you'd like.

At an even higher level, VRX would acquire assets using their [overvalued] stock as a currency (as well as exorbitant amounts of debt) for part of the consideration of these assets, then tout the deal as accretive (remember, there is a multiple "arbitrage" as they acquire assets below their trading multiple and then have them re-rated to their multiple). You're trading at ~13xEBITDA, and acquire assets at ~8xEBITDA... well, that is accretive (says VRX). They were able to do this as long as they had access to the capital markets. A confluence of events curtailed the pace of acquisitions (H. Clinton, M. Shkreli, heightened political environment at this juncture), however, in my opinion, it was the excessive leverage profile of the business pro-forma for the Salix acquisition. It went to >5xEBITDA - quite levered. In a way, VRX is a PE shop masquerading as a specialty pharma company.

Finally, I would like some color on your valuation approach. Are you including amortization of finite-lived assets (i.e., are you subtracting this instead of adding it back)? What about the measurement test adjustments? Unfortunately, a lot of the sell side fails to understand that amortization - in this case - is a real, economic expense. Many of these assets are not infinitely durable, sp tje amortization needs to be subtracted from an earnings or FCF number. When you're a serial acquirer, you're capitalizing your R&D, so you need to either subtract the "maintenance" acquisition of assets, or consider the amortization of these assets as a proxy. Keep in mind, they invest a de minimus amount of money into R&D.

So, to synthesize:
1. Why will they get "premium" valuations, as a forced seller, for assets that are deteriorating?
2. Some color on your valuation approach.

I'm not trying to bash (using your word from a previous conversation) Valeant, but I am really interested in your responses to these questions. Let's keep it civil without any ad hominems.

Lmao, no offense m8, but that is kinda what happens when you put so much in one company(the stress not the big loser). Honestly I really think anyone could jump in at these prices and end up with a 3x profit in a year's time. As soon as they get their report out or even if they just get the OK from the bond holders they will probably gain 10$ right there. I doubt it was overvalued 10x when it was trading for $200+.

But for real why is it taking so long to get a corrected report? Is it common for something like this to take awhile if I was Ackman trying to save face I would have people doing the accouting chit 24/7 till the report was fixed. I don't understand how that can take months to do?

It's taking "so long" because they are in contentious negotiations with their banks and bondholders for forbearance. What will be the increased costs for the loans and bonds? What type of concessions (i.e., increased restrictions on capital allocation, maintenance covenants, etc.).

Most interesting to me is that they (VRX) are also negotiating more relaxed interest covenants for FY'17. If the business is generating a lot of FCF, why would this need to be amended??? This also implies FY'17 EBITDA will come in well below what the sell side is modeling.

I would contend that the banks will not allow the "covenant EBITDA" for maintenance tests to be defined as liberally as it has.

[badbart]

https://m.youtube.com/watch?v=ZMbhze...ature=youtu.be

Tesla presentation

Started buying TSLA at 147 sold today at 235. It will be interesting watching it tomorrow. I remember Apple wold always go down after they unveiled a new product.

[ifitness1]

I don't think anybody minds commentary on VRX. However, I have to ask you a few questions:

Why would VRX be able to sell businesses - where fundamentals are deteriorating - at a "premium," as you suggest? Keep in mind, they will be forced sellers and the valuations that these assets will command will be a few turns below precedent transactions/market multiples.

Let's revisit VRX' acquisitive business model:
Acquire underpriced drugs/portfolios/assets with an eye towards synergies. The synergies typically came from aggressive cost cutting and "repricing." Often times, costs are cut too aggressively impacting the top-line of the acquired assets. Medicis ('12) is a great example of this, B&L, too. Look at glassdoor (lol), I can also post some "on-the-ground" research to substantiate these claims, if you'd like.

At an even higher level, VRX would acquire assets using their [overvalued] stock as a currency (as well as exorbitant amounts of debt) for part of the consideration of these assets, then tout the deal as accretive (remember, there is a multiple "arbitrage" as they acquire assets below their trading multiple and then have them re-rated to their multiple). You're trading at ~13xEBITDA, and acquire assets at ~8xEBITDA... well, that is accretive (says VRX). They were able to do this as long as they had access to the capital markets. A confluence of events curtailed the pace of acquisitions (H. Clinton, M. Shkreli, heightened political environment at this juncture), however, in my opinion, it was the excessive leverage profile of the business pro-forma for the Salix acquisition. It went to >5xEBITDA - quite levered. In a way, VRX is a PE shop masquerading as a specialty pharma company.

Finally, I would like some color on your valuation approach. Are you including amortization of finite-lived assets (i.e., are you subtracting this instead of adding it back)? What about the measurement test adjustments? Unfortunately, a lot of the sell side fails to understand that amortization - in this case - is a real, economic expense. Many of these assets are not infinitely durable, sp tje amortization needs to be subtracted from an earnings or FCF number. When you're a serial acquirer, you're capitalizing your R&D, so you need to either subtract the "maintenance" acquisition of assets, or consider the amortization of these assets as a proxy. Keep in mind, they invest a de minimus amount of money into R&D.

So, to synthesize:
1. Why will they get "premium" valuations, as a forced seller, for assets that are deteriorating?
2. Some color on your valuation approach.

I'm not trying to bash (using your word from a previous conversation) Valeant, but I am really interested in your responses to these questions. Let's keep it civil without any ad hominems.





It's taking "so long" because they are in contentious negotiations with their banks and bondholders for forbearance. What will be the increased costs for the loans and bonds? What type of concessions (i.e., increased restrictions on capital allocation, maintenance covenants, etc.).

Most interesting to me is that they (VRX) are also negotiating more relaxed interest covenants for FY'17. If the business is generating a lot of FCF, why would this need to be amended??? This also implies FY'17 EBITDA will come in well below what the sell side is modeling.

I would contend that the banks will not allow the "covenant EBITDA" for maintenance tests to be defined as liberally as it has.

Keeping it civil for sure. I never mean't to be hostile haha. Before getting into this I have to ask. Have you looked at the actual profile of the individual businesses? Like what is going on with each of the businesses and individual drugs? Growth/decline? generics/no generics? Reasoning? Competition/no competition? US and EM trends/sales in each sector of medicine (GI, derm, neuro, surgical, etc) they are in? The philidor/specialty pharmacy effect on a few of their big drugs? How about pharmacies who have temporarily stopped stocking valeant? Will that continue? Many issues with the business are 1 time issues/costs that can be repaired in the short term. I believe they have purposely gutted guidance in order to guarantee a beat, if not a significant beat.

The issues with those drugs that have been gutted the past quarter are not systemic ones. Mainly revolving around potential generics/drug pricing. They're drugs with a large consumer base and strong demand/need. Valeant may not have grown the businesses at all, but they haven't deteriorated intrinsically. Wouldn't expect anything less than 15-20x earnings for some of those businesses.

[woodbarry]

In on VRX. Bought 1 call for June strike 37.5 for $3.20. I figure if it drops more I'll add a couple more contracts and if it just goes straight up I'll be happy to see some gains. Not a sure thing but I think I could easily see gains in the next couple of weeks.

[Barn01]

You'll have to remind me when that day comes. I'll forget I'm sure haha.

Picks of the week ... I'm holding everything I bought last week but there are a couple newbies that I was considering trading out for.

PGEM and WNC

If I was to sell for replacement it would be selling out EXPR and BRSS

For the record this weeks performance on my two recommendations ... not my actual holdings (unfortunately)

PGEM +10%
WNC +2.5%

To compare SPY 1.9%
Alpha

[Gothwaite]

In on VRX. Bought 1 call for June strike 37.5 for $3.20. I figure if it drops more I'll add a couple more contracts and if it just goes straight up I'll be happy to see some gains. Not a sure thing but I think I could easily see gains in the next couple of weeks.

ive got 4 calls @ 30 2 weeks from now. gl to us

[Venom08]

Gold is bearish af. Couldn't close above 1230 so next stop is 1202. A close below 1202 means $900 prints, srs.
SLV failing to rally during gold's climb this year was indicative that this rally was not to be trusted. Short the rallies.

[romajc]

Knew nothing about options 6 weeks ago... thanks to TastyTrade my first month of options trading was a success lol

[badbart]

TSLA has done me good, bought some back at 238.





P.S. I'm waiting for JK expert analysis.

[romajc]

TSLA has done me good, bought some back at 238.





P.S. I'm waiting for JK expert analysis.

5yrs from now Model 3s will be all over the place

[badbart]

Knew nothing about options 6 weeks ago... thanks to TastyTrade my first month of options trading was a success lol

Are you selling puts?

[phailboat]

holy fuark, I just opened an investing account with $1000, only bought 90 shares from 1 company so far and still learning the ropes...VRX is catching my eye....but the real question here is


how the **** do I learn all this lingo you guys are using? it is literally like an alien language to me...

[ifitness1]

holy fuark, I just opened an investing account with $1000, only bought 90 shares from 1 company so far and still learning the ropes...VRX is catching my eye....but the real question here is


how the **** do I learn all this lingo you guys are using? it is literally like an alien language to me...

Investopedia to learn the basics about financial statement and all the lingo. Also, look for the book Margin of Safety by Seth Klarman.

In on VRX. Bought 1 call for June strike 37.5 for $3.20. I figure if it drops more I'll add a couple more contracts and if it just goes straight up I'll be happy to see some gains. Not a sure thing but I think I could easily see gains in the next couple of weeks.

ive got 4 calls @ 30 2 weeks from now. gl to us

Welcome aboard the Valeant train. I have an itch that Brent Saunders will be named CEO soon.

[romajc]

Are you selling puts?

Yup, makes the most sense to me. Selling otm puts at areas I think the stock will bounce back up... highish iv/iv ranks.

Still am at a lost when it comes to strangles and verticals and lizards.... etc etc lol

[badbart]

Yup, makes the most sense to me. Selling otm puts at areas I think the stock will bounce back up... highish iv/iv ranks.

Still am at a lost when it comes to strangles and verticals and lizards.... etc etc lol

check this out, CBOE S&P 500 PutWrite Index (PUT) Fact Sheet http://www.cboe.com/framed/PDFframed...20Fact%20Sheet

[romajc]

check this out, CBOE S&P 500 PutWrite Index (PUT) Fact Sheet http://www.cboe.com/framed/PDFframed...20Fact%20Sheet

Yea, and that writes puts even in extreme low vol when they arent nearly as beneficial

[DESERPENTOR]

Any advice about investing in Dividend Index 500 Funds?

[woodbarry]

Welcome aboard the Valeant train. I have an itch that Brent Saunders will be named CEO soon.

Just watched the big short. The game is rigged brahs. Just btfd the banks will look after us

http://money.cnn.com/2016/04/01/news...tegory=economy
I was right lol

[Venom08]

DJIA getting above 17900 and holding is what will prompt me to get long in my retirement account, but I think it's just consolidating a bit before a dip to the 16000s.