Risk/RewardLike many, my paper losses are substantial at this point. I didn't expect much of what was announced on Friday. The troubling thing is that the paid basher shorts on this board seemed to be very confident about the impending bad news. Did they have a source? We will probably never know. I'm also very troubled by management's lack of transparency on the impairment charges given the August 3rd press release which suggested everything was peachy.
As as a long, I now have to decide whether I take my substantial losses or ride this out with the hope of a recovery over the medium to long term. I agree with many that they can't withstand another substantial set back as what they announced on Friday and all of the events that took place during Q2, including Brexit, short attack, new competiton for off patent drugs, drastically changed strategic review etc. That said, the free cash flow being generated is still sufficient to cover their debt expense and there are no maturities for several years. They also have $145 mm cash and a $200mm undrawn revolver. In other words, insolvency is not around the corner. They still have a very long runway to change the direction of the business. That is why I am sticking around. If they do turn this around, the rewards will be substantial. That is honestly the only way I see myself making back my money. Do your own due diligence.