19 ms·
Full disclosure: Valeant is my largest short position. 99% of the time, shorting stocks is unemotional. Valeant is much, much different. This company is a CANC
by bedhead 11y ago
Full disclosure: Valeant is my largest short position.
99% of the time, shorting stocks is unemotional. Valeant is much, much different. This company is a CANCER on our society, and I don't say that lightly. It is a microcosm for why we have the most dysfunctional, expensive, and unsustainable healthcare system on the planet. They are leading the charge when it comes to figuring out ways to legally (but unethically) and illegally bilk the public for their own interest. I have studied the company for the past two years and it is absolutely rotten to the core. I hope all of senior management wind up in prison...unfortunately it might only be a couple when the dust settles.
I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers.
The ironic thing is that this is good for us in the long-run. This is exactly the kind of wake up call we need to fix our healthcare system.
- randomname2 11y ago> I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers. Notably Ackman has a very large position. The Swiss National Bank also owns 1.3 million Valeant shares. The similarities to Enron are uncanny, as pointed out in the research report that started this all: http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf http://www.citronresearch.com/wp-content/uploads/2015/10/Val...
- bedhead 11y agoNormally I like Citron's work, but when it comes to Valeant he is a total clown. Like most of the delusional defenders such as Ackman, Citron focuses on the wrong things like accounting and channel stuffing (although I believe there is some channel stuffing going on, it's relatively unimportant). Trust me the guy is totally clueless, but he is certainly a useful idiot if there ever was one.
- mikeyouse 11y agoThe allegations of channel stuffing were pretty reasonable from the outside.. When Left wrote his report, it was clear that Valeant had extensive relationships with several pharmacies that weren't disclosed -- he couldn't have known that although Valeant didn't own any of them, they were rolling up their financials. His intuition was pretty spot on though, since he felt there must be something shady going on given that Valeant hadn't disclosed their relationship and it was clear they were responsible for hundreds of millions in revenue.
- deleted 11y ago[deleted]
- toomuchtodo 11y agoHave you written any online resources regarding this? I'd love to deep dive (and perhaps even short myself, for activist reasons).
- bedhead 11y agoNo but there have been enough news stories in the last week or two to get up to speed. Happy to answer any specific questions.
- deleted 11y ago[deleted]
- chjohasbrouck 11y agoWhat is Valeant doing that is illegal/unethical? After reading the article and your comment I still don't really understand what they did. All I know for sure is that Valeant buys a lot of pharmacies, and one of them accused them of fraud? What are the specifics of what they're doing, and how is it harmful to consumers?
- toomuchtodo 11y agohttps://news.ycombinator.com/item?id=10484815 https://news.ycombinator.com/item?id=10484815
- tortilla 11y agoSome good articles here: http://brontecapital.blogspot.com/2015/10/comments-on-blockbuster-valeant.html http://brontecapital.blogspot.com/2015/10/comments-on-blockb...
- seivan 11y agoIt's funny you should say this! I actually asked a couple of days ago if one should short the fuck out if it https://news.ycombinator.com/item?id=10460488 https://news.ycombinator.com/item?id=10460488
- toomuchtodo 11y agoI must know! Did you then proceed to short the fuck out of it?
- seivan 11y agoHaha, can't find it in the Swedish marketplaces.
- danieltillett 11y agoHow hard is it these days to actually get the shares to short?
- jsprogrammer 11y agoWhy do you need to short if you can just purchase (or sell) options?
- PhantomGremlin 11y agoThe price of put options on VRX is extremely high. For example, VRX closed on Friday at $93.77. The cost of a 1 week put at 90 strike was about $5.70. The cost of a 2.5 month put at 90 strike was about $15.00. The cost of a 15 month put at 50 strike was about $10.00. I doubt that VRX will collapse immediately. These things always take a while to play out. With that in mind, look at that last data point. You would have to pay $10 for an option that won't have any value at all unless VRX goes from $94 to under $50 in the next 15 months. It might make more sense to sell a call spread instead of purchasing puts, but the option prices are very high and this stock swings wildly. This is definitely adult swim, the very deep end of the pool. I'm not brave enough to play this stock. It's much like playing Herbalife, where you've got billionaires like Ackman on one side, billionaires like Icahn on the other side. Often the best move for a small investor is to not play at all.
- jsprogrammer 11y agoSo take a position that makes money on large swings?
- deleted 11y ago[deleted]
- bedhead 11y agoIt's still what's known as "general collateral" - it's not only easy but free to borrow shares. I shorted more shares yesterday.
- deleted 11y ago
- lifeisstillgood 11y agoGenuine question - is not the big downside of shorting that there is a real non-zero risk that there won't be a company to have shares in shortly?
- deleted 11y ago[deleted]
- ikeboy 11y agoNope; if the company goes bust, you make full profit, because you don't need to return useless shares. See http://www.investopedia.com/ask/answers/03/082803.asp http://www.investopedia.com/ask/answers/03/082803.asp