Joseph_K wrote: I thought the SA article was heavily shaded towards trying to justify the investment that she obviously made too soon. Talking about the debt multiples and trying to imply that something has changed with them recently by mentioning it right next to the Feb conference comment, when this was actually brought up in October on BNN by the CEO. Nothing has changed since then. We still need to see the first evidence that the integration and profitability is going according to plan. If the author was really trying to be honest and unbiased, she would have given dates and stock prices for her comments. Saying things like Jason considers Concordia as one of his top five for 2016 citing 3.6x earnings and 0.8x book value, while ignoring that she is referring to his comment from October, and oh! look at what the share price was then! She could have quoted his more recent comments, like from the last time he was on Market Call Tonight on March 7th. For example:
"
This stock is trading on 4 times 2016 earnings and less than it's projected 2016 book value, but stocks are never that cheap unless they have an issue. And these guys do have an issue. Its not pricing. Its not any kind of ethical stuff that other guys have got themselves into. They're just (pause), they've got too much debt. They are over levered. But we think that they have made progress. They've been appearing at a lot of conferences saying that they've made progress in paying down their debt. And we think over the course of 2016, with each quarter, as they pay down the debt more and more, that the stock will be able to go through a fairly significant re-rating. I think the stock is one where um institutions are going to have to take a look at, they may not choose to own it, but as the debt level comes down and it goes below a certain threshold or they seem to be making good progress, I think you are going to see a lot of money that comes back into this name. It will probably come back into this name more easily than into other names." "They are generating a lot of cash flow, and no one ever questinos that they are generating a lot of cash flow, its just that they levered up to five and a half times and kind of the upper limit of a lot of peoples comfort level is 4 times, so they are quite a bit over this. And when they had their debacle with their financing back in .. September, a lot of people said 'why didn't you take more equity at the time when your stock was up there?', Anyway, they didn't, we have to live with it, and you're sitting with a stock at 4x earnings, trading at book value, and I think from a risk / reward, I don't think it has a lot of down side." There, an honest quote. Yes, he likes it. So do I. I just don't know if it hit the bottom of this down trend at the close on Friday, or if it will come Tuesday or Wednesday before the earnings are released, or, if they disappoint, if it will come the following week when selling and manipulation takes it to a lower trend bottom.
Donville made his famous rant when the stock was in the $20s. I'm sure he loaded up at that time. Heck, CXR was trading in the $39 range on March 3rd when Donville was scheduled to appear on Market Call Tonight on March 7th. So what happens? Everyone started loading up expecting him to pump it, and he did as you can see in the quote above, but by the time he did that night, it had already closed at $43.69. That quick 10% gain had been locked in by the smart money, and only the sheep kept buying the next few days, driving it up to it's $45.94 peak close on the 11th. The smart(er) money really started bailing out that day and the downslope began forming. VRX didn't implode until the 15th. After that, it seemed obvious (to me at least) that CXR would not only pull back to the $39 range, but go well below it in sympathy with the VRX collapse. So here we sit, at $35.11, about a buck fifty above where we closed on Feb 11th, but still well above the $25ish range it collapsed to last fall.
Some people thought $25 was nuts back then, some people thought VRX wouldn't crack $100 either. Weren't they surprised when a month later in November, VRX did drop ($20 to $50 more, depending on your perspective) and briefly crack below $100. Of course, it rebounded back over $160 a month later. Are they now astonished that it is under $40? Shouldn't they be? But I digress and am spinning off topic.
I agreed back then that $25 was nuts, and I started buying after the bottom turn in the high $20s. I was basing my 'this is nuts' theory on the projections for revenue for 2016 and 2017 at that time. We are in the 3rd month of 2016 now, and it is still just a theory. That changes on Wednesday. And yes, I sold the top turn in January, bought the bottom turn in February and sold the top turn again in March. I also expect a bottom turn next week if the results are good, or the week after if they aren't so good. I'll be back in CXR soon.
After watching VRX drop close to 50% in one day, and keep falling for several more days, mostly due to 'uncertainty', as ultimately I expect the earnings will prove better than the worst case scenario playing out, we know just how powerful 'uncertainty', 'fear', and the 'short attack' can be. We've all witnessed just how much these can devestate a stock.
Ultimately, I agree with Donville. I think there is good value in this stock and eventually the numbers will prove it. If there is a blip next week, I think it will be more of an integration issue blip. More of a one time event/delay. I think the long term trend is still a decent up slope that develops over years.
Fear of the unknown is what has been driving the stock down this past week. Hard numbers Wednesday night will be what keeps the down trend intact, or reverses it going forward.
The big problem here of course is the debt. If they really are making significant progress in paying down the debt and keep making that significant progress each quarter that passes, then the stock will have the downward pressure lifted and be able to make some big moves up in price.
The only problem with this is that the market has to decide what 'significant' progress actually is. And the market is heavily influenced by issues outside of the company. Valeant and their collapse plus debt fears will have an impact. In future quarters, global events will also shade the definition of 'significant progress' one way or another. This debt repayment progress will be a moving target from quarter to quarter. Right now, it feels like the target has to be pretty high considering the Valeant situation and that it is only a week removed from publishing the numbers Wednesday night. What you and I may think of as 'good progress' may look to shorters as a reason to attack. It is going to be an interesting week.
Also, for those that bought Friday under $35, you may have timed it perfectly. Or, like the SA author, you may have bought in way too soon. Personally, I've learned my lessons over the years and try to only buy after the bottom or top turns are established. That may mean I miss the first couple bucks of the bounce, but I'm also never reaching for that falling knife too soon.
Good luck to you all, no matter which side of the trade you are on.
DeathPool wrote: Sunshine. I actually like this Seeking Alpha author. I read a lot of her stuff. I have to wonder if Inzy may have felt differently at the end of the week - as she wrote the article the morning after Valeant confessed to their sins and Inz repents that she bought more shares at $41.18. .... And we all know how the week unfolded for them and us.
sunshine7 wrote: Interesting article on SA that reflects my thoughts on the situation. Rather than providing a long-winded post here, read... https://seekingalpha.com/article/3958834-wrong-concordia