Here is an update from Bill Miller's web site for the Opportunity Equity fund. Under the heading of "Current Thinking" dated yesterday 4/20/2017. I am long VRX and have been about a year, obviously not a happy shareholder.
"On the other hand, Valeant and Endo have been some of our worst performers so far but we think that could soon change. Like RH, we don’t expect the stocks to turn around until the business fundamentals do. However, we think that could be soon.
Valeant recently hired a new CFO, Paul Herendeen, who’s very highly regarded. We, too, have been extremely impressed with him. He is logical and rational and understands how to create value. He said when hired that he viewed guidance as a “commitment.” We took that to mean guidance would likely be quite conservative. When the company issued guidance in February the stock sold off sharply, as the outlook was below analysts’ consensus. Our expectation is that the guidance was what Amazon typically calls “appropriately conservative.”
Also pressuring the stock was Bill Ackman’s sale of Pershing Square’s entire 27 million share position at a price of just over $11, which not surprisingly garnered a lot of attention. Less remarked upon, but more significant in our opinion, were the purchases of stock by long time Valeant investor Value Act Partners, and by CFO Herendeen. Both were made late in the quarter. Value Act has a board seat and if anyone has insight into how the quarter is going it is the CFO. We think these purchases are consistent with our view that the quarterly guidance has a reasonable shot at being exceeded. Valeant indicated last year that 2017 was likely to be a down year but that they expected to resume growth in 2018. If the market begins to believe the worst is over, we think the stock could have the same kind of rapid price recovery we saw with RH, which nearly doubled in 60 days.
On a longer term basis, Valeant has some very high quality businesses, including Bausch & Lomb and Salix. The recent debt refinancing gives it three years to execute a turnaround plan. People remain concerned about the overleveraged balance sheet. Paying down debt is a top priority for the company. We remain confident in its ability to do so, and there are scenarios where leverage can quickly fall to 5x net debt to EBITDA. We continue to think Valeant is likely worth multiples of where the current stock trades."
|
1 |
... |
64 |
65 |
66 |
|
68 |
69 |
70 |
...
| 86
Thread abonnieren
