Concordia International Corp (CXR.TO)

He prefers to cut losses because of the amount of debt on the books. When you get into trouble you still have to fund all that debt. He doesn’t see the company coming back. Cut your losses.

A real tough one, and he is watching with interest. Looking at the balance sheet, you have to be really concerned in that they probably have negative equity. Also, their drugs have not been performing very well. There are headwinds in their recent acquisition from the UK. In the last little while, he has noticed that some value managers are starting to pick up the stock. He would like to see a trend change in revenue and EBITDA.

At the time, this was a compelling pitch. You were buying drugs that were mispriced and were making a lot of money. It is really difficult when looking at a highly leveraged company like this to justify a turnaround. They are going to have to reduce debt and sell off some assets. In the meantime, the regulatory environment is not very favourable at all.

The gig is up in that whole business model. They started hiking up prices and getting aggressive on sales tactics. They are facing upcoming generic competition.

2014 to mid-2016 is a big mountain of oversupply on the chart. No buyers have emerged. There is continued selling pressure. He wouldn’t touch this. Today is a very good day to see if there is capitulation. You need a very strong close, much higher than the intraday low. If you can close off the low with good volume, and if there is good price action on Monday, then you might have seen capitulation. Capitulation is only one of the preconditions of a rally.

The debt is just so overwhelming. He is not sure they are going to be able to fix the problems with the balance sheet.

(Market Call Minute.) Doesn’t think there is any visibility going forward.

There are a number of factors. Healthcare is just getting devastated, they have a lot of debt, got caught up in a pricing scandal, and there was BREXIT. He would be cautious on this. It may be a turn around play, but he thinks it is going to be a year and the stock could be lower. Lots of debt.

Has never been a fan of these types of stocks. He feels that they are un-investable stocks for value quality investment managers such as himself.

This has big red flashing danger signals. From a long-term investor’s perspective, it is a perfect example of a stock to really watch for when investing. Avoid bad balance sheets. This was built on making aggressive acquisitions with a lot of debt to back it up.

Had been Short for a fair while, but you don’t want a big Short position right at the bottom. They missed on earnings on their most recent quarter and the stock fell another 30%-40%. It is cheap, but an extremely volatile stock and not a lot of visibility on what earnings look like. Scores at the absolute bottom on price momentum.

Structured in such a way that it can fit a portfolio that wants dividend payments, but is not really driven by that. There are so many headwinds with regards to regulatory pressures, and it is possible this stock will be very, very volatile, until we know who is going to be the US president. He is expecting more volatility.

This has got back to the level where he had started to initially acquire it. He would like to see the Donnatal numbers stabilize and what happens with some of the new things that are coming out with in the International division. He would wait a quarter or 2 of solid numbers before stepping back in.

He is holding his position and evaluating the name. Was surprised that on the last results on the generic drug competition. There are concerns about debt levels and the company has some headwinds. This is in a better place than a Valeant (VRX-N) where there is potential fraud. Should their earnings progress, it will have the ability to pay down debt.

Had viewed this as being undervalued given what he had thought they could generate in earnings and free cash flow. In the last 6 weeks there has been a massive deterioration in the business, where there was a generic approved for Nilandron, one of their big products. Donnatal scripts keep going down. It also had Plaquenal where competition got approved by the FDA. On top of that, you have the CFO leaving. He exited his position. Be careful on this.