Courtesy of Joshua M Brown
This morning, a hedge fund manager with a large position in embattled pharma company Valeant held a three hour conference call to assuage investor concerns about its 50% crash over the last few months.
It’s not working so far, the stock is bleeding all over the exchange as of this posting.
My take on whether or not investors should care about Valeant and its developing situation just went live at Fortune today. Read it at the link below:
The stock that ate Wall Street (Fortune)
Excerpt:
This spring, Charlie Munger held court at the annual shareholder meeting for the Daily Journal Corporation, a small newspaper company where he serves as chairman of the board. Someone asked him about Valeant, at that time one of the highest-flying stocks in the market. Munger didn’t mince words: “Valeant is like ITT and Harold Geneen come back to life, only the guy is worse this time.”
Munger was alluding to one of the worst conglomerates ever assembled by Wall Street’s deal-making machine. And“the guy” in this case is McKinsey veteran J. Michael Pearson, who had built Valeant into a $90 billion pharmaceutical conglomerate virtually overnight. Pearson is no scientific wunderkind, nor did Valeant have any breakthrough drug hit the shelves during his tenure. Instead, the company’s rapid success could be chalked up to aggressive dealmaking of the sort we haven’t seen since the late 1990s heyday of Tyco and Dennis Kozlowski.
Over the past few weeks, Valeant VRX 6.86% has been embroiled in the early stages of a scandal that now threatens to level the company and its largest shareholders should it spiral out of control. Short-sellers are alleging that the company has several pharmacies it controls that enable it to subvert prescription rules and “stuff the channel” with sales that never actually materialize. The company held a conference call last week to refute these claims, but the stock continues to crater as every new detail leads to additional questions.
