Thursday, November 5, 2015

Kase Capital's (formerly T2 Partners') Whitney Tilson Talks About (a lot of) Stuff (VRX)

From ValueWalk:
Whitney Tilson’s discusses activist Investor Bill Ackman plays defense; drugs, greed and a dead boy, short seller who took on ‘porn’s new king’ is still standing, dems undermine, sensible pricing comes to high-risk debt securities, The Big Short movie and a conversation with his legs. Excerpted from an email which Whitney Tilson sent to investors.

Whitney Tilson – Bill Ackman’s investment in Valeant

1) Below is an article about Bill Ackman and his investment in Valeant from the front page of today’s WSJ. I’m quoted briefly.
Every investor should analyze this case study to learn from Ackman’s experience, as every last one of us has had (and will have) to deal with a major investment going south. How do you collect more information, filter out the noise, analyze the situation, control your emotions, and ultimately make the right decision among four choices: dump it all, trim, hold, or buy? It is almost never obvious what the right answer is – rather, every option feels really crappy when you’ve lost a lot of money on an investment, especially if you’re in the hot glare of the public spotlight. I’ve been there and it’s no fun.
2) This op ed in today’s NYT by Nick Kristof adds a little perspective: in pursuit of higher profits, many, many pharma companies have done terrible things, some which may have actually killed people (at least Valeant hasn’t been accused of that)!
When Andrew was 15, the medications caught up with him and he suffered a rare complication from one of them, Seroquel. One Friday he was well enough to go to school; on Sunday he was brain-dead.
That’s the story that Steven Francesco, a longtime pharmaceutical industry executive and consultant, tells in “Overmedicated and Undertreated,” his harrowing memoir of raising Andrew, his son. He makes clear that the larger problem — even from his view as an industry insider — is a sector that sometimes puts profits above public well-being.

Andrew Francesco
Andrew Francesco at age 8. Credit Steven Francesco
Here’s the central issue: Children with emotional or mental disorders have become a gold mine for the drug industry. Psychiatric medicines for children account for billions of dollars in sales annually, and the market has boomed.

Between the mid-1990s and the late 2000s, prescriptions of antipsychotics for children rose about sevenfold.

And now the industry is getting even greedier.

Whitney Tilson – Disadvantages to be an activist short seller

3) Re. my comment in my last email about how hard and dangerous it is to be an activist short seller, here’s an article in yesterday’s WSJ about one such case:
Keith Dalrymple says he probably wouldn’t do it again.
The financial analyst, who runs a small research firm with his wife in her native Bulgaria, in early 2011 published a report saying a Bermuda-based reinsurance firm was “likely fraudulent.”
In the bruising years that followed, the company, Gerova Financial Group Ltd., attacked the Dalrymples in the media and said it had hired a prominent investigative firm to probe their “possible market manipulation and collusion.” The couple was sued multiple times by individuals and firms linked to Gerova....MUCH MORE
Here's the WSJ's story "Activist Investor Bill Ackman Plays Defense"
For more Ackman see FT Alphaville's "The next Berkshire Hathaway in action"
Valeant is down another 12% today.