Valeant Pharmaceuticals (VRX.TO)

In 2015, this had a head and shoulders top and a neckline break. You don't want to buy a stock that is doing that. You need it to start to consolidate and break out. It is not doing that, so there is no reason to buy this.

He used to love to say bad things about this company. It is going sideways and seems to be solving some of their overhanging debt problems. Expect you may have to see this stock go sideways for another couple of years before they sort out their game plan. Don’t go with fallen angels, move on to better places.

Thinks they have a definite a chance to survive. Have sales of about $9-$10 billion, and a huge debt load of around $40 billion. They have big problems, but the CEO says they are about where they want to be with the debt. Has all kinds of legal problems they have to deal with. Companies that do takeover after takeover and take on debt, generally get into trouble. Doesn’t feel it is cheap enough. If it got under $10, he might look at it.

There is way too much debt on the balance sheet. The net debt to EBITDA is about 7X, very, very high. New management has come in, made some asset sales and paid off some debt that was coming due. The next tranche of debt is not due until 2020. However, there is very little visibility in terms of their products going forward. They are going to experience more genetic competition and pricing pressure in their dermatology division. It is hard to see how they are going to generate the necessary cash to start their debt repayments down the road.

There are concerns overall with prices of drugs in the US. Healthcare costs for US citizens continue to go up. Earnings are expected to go down 31% this year. At some point investors will probably warm up to this stock.

He missed the Up and the Down. It is stabilizing and now becoming a regular company again. It is too unstable still for him. He owns a Danish Pharma and thereby misses the volatility of this one.

He said he would not buy it on the way up because they were doing so many takeovers. They took on a lot of debt to do it and now they are paying the piper. The CEO says the selloff is done, but the financial statements say there is a lot of debt out there. He would consider buying it during tax loss season.

Doing a pretty good job, but his view is that fallen angels are stocks you stay away from. This is going to take at least 6-9 months to build a base. They have to reduce the debt more, so it is more of a sideways situation. After it finishes its base building, have a hard look and see what their product mix looks like, and then step in.

This can be pretty choppy. You can play it as a restructuring story, but there are lots of other good pharmaceutical companies that you can buy. The issue they face is that they have lots of debt, but can’t really acquire anything because they don’t have the money or the debt capacity. They are in a bit of a quandary. Prefers others.

This had been a Short for him, but had fallen so far and so fast it had become what he calls a dangerous Short. They have a huge amount of debt and a small sliver of equity. Any improvement in the business flows to the equity, so it can have very sharp moves. One of the most volatile stocks in the index. They really aren’t earning any money and don’t have any positive ROE.

They want to sell off a lot of assets by next year. They want to reduce their debt load. It is too expensive for him, but if it comes down it could be of interest to him. You have to be weary of companies that do too many takeovers.

He doesn’t own this because of their concentration in the MS market. There are 2 other companies in this area with possible better drugs. He feels there are going to be very binary outcomes with no dividends. Prefers something with a little more diversity.

This is gambling. He would not touch it. Huge debt load. It is not even for the speculator. It is for the gambler.

Has new management which are trying to sell off some assets and get the prices they want. Trying to change the way they operate in terms of not buying companies that actually do internal R&D, but that is difficult because they don’t have a lot of cash, but have a lot of debt. There is not a lot of visibility, which is why the stock is trading where it is. Drug pricing is now being highly scrutinized, and she doesn’t see that going away.

This is a tough call. The guy that is running the business is doing a good job. The problem is that they’ve got a debt, and what is the pricing power of this company going to be. As they sell assets in a less exuberant market than what they were purchasing them, he doesn’t think they are getting the same value proposition for the sale that offsets the amount of debt that they are able to retire. He is not touching this.