Valeant Pharmaceuticals (NYSE:VRX) Stock: Time to Face the Ugly Truth

- April 5, 2017

The reality of investing is that you will lose from time to time. It happens to even the best of investors. However, it is never easy to admit defeat. When it comes to Valeant Pharmaceuticals Intl Inc (NYSE:VRX), the ugly truth is not that hard to find.

I added a few 100 shares of VRX stock to the BNL Portfolio at $36/share. After crashing from over $200/share, $36 seemed like a good speculative bet. I then upped the ante with 4,000 shares between $15.75 and $16.85. Finally, we called VRX stock a “Strong Buy” at $12/share.

The BNL Portfolio has outperformed the S&P 500 by triple digits pretty much each year since 2011. A big reason for that performance has been buying quality stocks when negative sentiment pushes them too low, and then riding the wave higher as sentiment rises. There are too many examples to name, but in the case of Valeant stock, it reminded me very much of a previous investment in Netflix (NASDAQ:NFLX).

In 2011, I bought Netflix stock at what would be $25 (adjusted post-split), watched it fall 50%, and held before selling at $61/share. It was a near 150% return despite a 50% collapse shortly after buying it. I have always thought that Valeant Pharmaceuticals (NYSE:VRX) would do the same. It’s debt pile is large, but with positive free cash flow and value in its sum of parts, Valeant could pay down that debt over time. That was the theory.

What’s Bill Ackman know?People can make a couple million dollars with some luck. Hell, I’d argue the BNL Portfolio is proof. However, billionaires are smart people. You must be skillful to reach that point.

Bill Ackman is a billionaire, and runs a very successful hedge fund where image, reputation, and performance are important. Valeant Pharmaceuticals (NYSE:VRX) has been an absolute embarrassment for Pershing Square and Bill Ackman. VRX stock has made him look like a clown.

Most in his situation who rode VRX stock from the triple digits to low double digits would simple hang tight and see where the road takes them. The fact that Ackman held through so much loss, and did the same with Herbalife, then decided to walk away and cash out of VRX stock at $11/share, is unbelievably gutsy.

Just think how Bill Ackman would be viewed if VRX stock were to reverse, double many times over, and $11/share proved to be the bottom. He would instantly go from the Ritz Carlton of the financial world to Travelodge.

This entry was posted in Editor's Pick, Healthcare & Biotech, Members, Timely Analysis and tagged , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Post a comment or leave a trackback: Trackback URL.

3 Trackbacks

  1. […] admitted something very difficult: I was wrong about Valeant Pharmaceuticals (NYSE:VRX). It was an ugly truth, but with so much debt, enormous interest expenses, and a laundry list of lawsuits to come, the […]

  2. By Encuentra más on April 7, 2017 at 5:23 pm

    Encuentra más

    Valeant Pharmaceuticals (NYSE:VRX) Stock: Time to Face the Ugly Truth

  3. […] There are a million reasons why Valeant Pharmaceuticals (NYSE:VRX) should make a solid recovery. However, poor sentiment, ridiculous interest expenses, dilution caused by stock options, and impending lawsuits are all reasons why VRX stock might very well be doomed (read here). […]

Post a Comment

You must be logged in to post a comment.







Join the 100s Who Beat the Market with a BNL Membership

See What Current Members Are Saying

My Complete Access BNL Membership Includes

  • No contract. Guaranteed results. Cancel anytime.
  • Unrivaled Performance. The BNL Portfolio has outperformed the S&P 500 by 150% since October 1, 2015
  • Access. You know what goes in the BNL Portfolio, David’s Dividend Portfolio, and Eddy’s Options.
  • Alerts. You know when a trade is made in all three managed portfolios with application, text, and email alerts
  • Transparency. Verifiable trade records for the BNL Portfolio, David’s Dividends, & Eddy’s Options
  • Research. We have coverage on more than 50 companies
  • Results. Our 10 highest rated stocks outperformed the market by 134% last year
  • Live Chat. Join 100s of other members in an exclusive Members Only section with Chat
  • Growth. We are the fastest growing financial research platform in our industry.
  • Build My Portfolio. You give us your goals, we help you get there
  • Premium Content. Unlock hidden sections in each article. You also get Value of the Month selections and BNL Research Reports.
  • Community. We have professionals and beginners; retirees and college students; the 99% & 1%, but here, we are all equal.


Like what you see? Sign up for our newsletter and get the latest stock picks straight to your email!