Okay.. Im going to go out on a limb.
Valeant is the next Freeport.
Hated company backed by activist hedgefund manager that other managers want to punish.
But it was a loved company backed by hedgefund manager that other managers wanted in on....any company with that high investment by mostly hedgefunds is the problem.
I going to throw out a couple concessions. First, what Valeant did was detestable and will not be tolerated by the public or government. Also, the accounting practices are awful.
I don't know if it is detestable or not at least as far as raising prices, supply and demand and what not...how they did it using fraudulent pharmacies and accounting on the other hand is detestable.
A lot of companies raise prices dramatically when they acquire products, in this case the government and insurance companies allow it....that is the problem.
That said, they are changing management and they have a smart guy with a lot of money at risk doing his best to bail them out of this mess. I think he can do it. Politics does not make a business profitable and the market likes to over react. I have a $160 on Valeant that says its worth more. I love Robinhood. Right now its in the red and I don't care. Things that go red fast go green fast too. (at least sometimes they do).
So smart in fact that Ackman is in it at $160ish/share and has lost $4billion. He was only smart with Valeant when he and Pearson concocted a defacto insider trading scheme that was just a hair inside of legal with a thesis that prices would continue to escalate rapidly combined with acquisitions of new products funded entirely by debt.
Anyone want to talk about heavily indebted companies with hated managers that are going to reverse? But wait, you sold $MDLZ Bill? WTF!!! I love Cadbury chocolate bars. Love them. Sees step over and Hershey tip your hat because the sparkly purple packaging calls to me like the dark side of the force.
Ackman was again so smart as to sell MDLZ, a pretty good company, to fund redemptions and/or margin calls (he said he doesn't use margin though).
This is a company that if it can't file its 10Q faces defaults on its massive debt.....IMO the reason it can't file is because its auditors are so far from being able to, or willing to, sign off on the financials.
The whole thing was a scam. There are numerous lawsuits and investigations.
Restated revenue and earnings guidance has been dropped and is probably still optimistic....dermatology unit relied exclusively on the scammy pharmacy and all of the products and brand name that have been around forever and have proven generics that are low cost.
There is still value to this company if they solve the default issue, but given low growth prospects for price and volume, high debt load, and pending resolutions to accounting, investigations, and lawsuits I am not sure there is any more upside to the stock than its recent rebound.
They will have to start selling products/units to stay afloat.