Before the Q1 ER, VRX was $68 ps. The drop after the ER was due mostly to the delayed 10-K. But now the 10-K is done, we have a new CEO, why are we not back to $68?
VRX stock is not for everyone. Buffet and Munger are clean types and invest in only missionary position stocks.
Fatboy Pearson fashion a company after himself. A greedy pig whose moral compass was always in the desk drawer. Investors loved him.
There are many on this YMB whose cost basis is three figures. Ackman said yesterday that it will take three years to get back to that point. Three forking years? VRX needs to go back to the old ways and increase revenues any way they can. Papa needs to go on a Twinkies diet to bulk up for the task ahead.
Who wants to wait three years? Greed is good.
You may be a futurist but smart....? I see a stodgy investor stuck on STX for some unknown reason. You postulate that people will ride a mechanical horse rather than ride in a car. Will it smell like a horse and drop road apples? Absolutely stupid IMHO.
In 1918 cars were not as reliable as today. Did that stop the evolution from horse to cars?
SSD drives are faster and do not make noise. Failure rates for both are similar and small.
But not to worry: There will be a long tail to STX's HDD business.
STX is comparable to a buggy whip manufacturer in 1918. Cars (SSD) were replacing horses (HDD) at a rapid clip. WDC saw this and bought SNDK. There will always be a need for HDDs but volumes should decline over time. Micron, and Hynix are bringing out cheaper flash memories which should accelerate the decline.
MU and STX need to merge as it will put a boost in both stocks.
Fatboy Pearson has been singled out as the force behind the huge price increases for certain life saving drugs. This gives rise to an ethical question.
A company has the right to pursue profits. Should they be allowed to raise drug prices at will as this is within the profit mandate and does not break any laws? Can they do this and tell the patient to suck it up and pay? No pay, no pills, patient dies. Obviously the dead patient did not want to pay the higher price. His choice; a win for microeconomic choices.
Ackman is short a boatload of Jan 17 $60 puts currently underwater. He has about 7 months to get the price up above $60 else he buys more VRX.
He may pull it off. He should pull it off. No doubt he is not looking for a 3 year plan from Papa. He needs it now!
As little as 6 months ago VRX lived by "greed is good." Plundering companies, raising prices, cheating payors; all a lot easier than R&D. In fact the wiping out of R&D is a fundamental principle of Fatman Pearson. It's like Twinkies are a staple.
They still don't have an R&D team. How much do you think has happened positively in product development?
It's not that simple. VRX can no long acquire companies and raise product prices. To replace declining products, they must spend R&D money. This comes from operating cash flow.
How can Fat Man Pearson go from the smartest man on wall street to a Sewer Keeper? Keep in mind, this change happened over a 8 month period. Buffet and Munger viewed VRX as a sewer years ago. How can the smartest guys in Hedgefundville (like Ackman) miss the sewer smell? The Sequoia Fund was 50% VRX and also did not detect anything?
In a word, it was GREED. Fat Boy is the embodiment of a "Greed is good" philosophy. The beancounters call this "Tone at the top." At the core of every hedge fund is an engine that runs on greed.
The catalyst for the metamorphose of Fatty Pearson was Andrew Left. He was not perfectly correct in Philidor but he was close. Then came Hillary. And then Congress piled on.
For the VRX model to work, it must use slimy tactics. Pearson's adipose luggage was full of methods to soft cheat or outright steal money from payers and customers. But now this is all gone as is big-belly Pearson. Now VRX must abide by clean corporate rules similar to what Buffet follows.
The survival of VRX relies on transforming an uber-leveraged sewer type entity to a friendly and responsible SBUX type company. The change at the top and Board is only the beginning. Many VRX managers are suited only for sewer companies and must go. In fact, there needs to be a huge reduction in force (25%) to boost free cash flow in order to deal with the debt.
Explosive got me into GTAT (now GTATQ) and MCP (now MCPIQ). Both these stocks have been stellar performers. But I must wait to harvest the gains. I am still holding on to my BLIAQ for one day it will rise again.
NOLs are not a guaranteed to survive BK. It's $1.7 bil in losses that that can be used to offset future gains. As a tax savings, it's only worth $600 mil. Maybe the creditors will just ignore it.
Your $4.17 is based on the existing float and is equal to a market cap of $1.7 bil. This same market cap can be achieved by giving large quantities of stock to creditors. In essence, a massive dilution. Existing longs will lose out.
VRX premiums are still very healthy.
But the super premiums are found in SRPT. Just before its AdCom last week, I sold the weekly $11.50 put for $3.00. And that was when the stock was trading at $14.00.
Buffet and Munger run a clean ship and make billions by allowing good companies prosper over time.
Pearson is different. He is more like Gordon Gekko (Greed is Good). He didn't care if raising prices on life saving drugs distressed the customers. Fat man would only hire amoral testosterone-laced managers that would throw their own mother under a bus if it insured numbers were met. Hopefully mom heals from her injuries. She got her just desserts for raising a child who does not know right from wrong.
Now we have new management. But VRX's corporate structure is a mess. Hopefully, they can turn things around.
On Thursday with no 10-K published, a smart trader could have loaded up on the VRX $35 options expiring today. Back up the truck. It was a sure bet on a $5 run up.
But it did not work out that way. All that option premium wiped out!
WBA will hurt VRX. Philidor was slimy, but it bought in the money. WBA will not change prescriptions to VRX products. They will not game the payors to maximize $$$$$. It is tough doing business when greed is no longer good.