There are all kinds of theories flying around about who or what exactly is responsible for Valeant Pharmaceuticals Intl Inc VRX 5.18%’s fall from grace. The New York Times‘ Steven Solomon broke down a number of the leading theories.
Valeant as Enron: This theory is that Valeant’s operations and earnings are simply inflated by fraudulent accounting, and the company will inevitably be taken down at some point.
Beware McKinsey: This theory centers on Valeant CEO J. Michael Pearson, a former consultant at McKinsey, surrounding himself with former McKinsey advisors and using tricks of the financial trade to create the appearance of organic growth.
The Perils of R&D Cuts: This theory asserts that Valeant’s problems are simply the inevitable consequences of driving growth via acquisitions and price hikes rather than investing in a solid R&P pipeline.
Predatory Pricing: This theory is that Valeant’s history of buying new drugs and aggressively raising prices is no longer viable following intense scrutiny of drug pricing by Congress and the media.
The Hedge Funds: Valeant activist fund shareholder ValueAct pushed hard for R&D cuts and more focus on acquisitions, and this theory blames ValueAct’s influence for Valeant’s downfall.
The Shareholders: This theory is that Valeant has…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
