Raging Capital - Great Call Raging Capital – CXRX short communicated in newsletter in October, stock plunges
It was the third quarter when Raging Capital went on a rage against Concordia International Corp (CXRX) in the fund’s letter to investors. On October 21, 2016 CXRX was trading at $4.48. The stock since went on a major tear lower, Thursday trading at $2.05, making this one of the fund’s successful shorts.
CXRX is often considered in the same breadth with Valeant Pharmaceuticals, where issues were raised regarding business practices first reported by Roddy Boyd of The Southern Investigative Reporting Foundation.
Raging Capital caught this trend and applied analysis from a different perspective. Martin and Raging Capital Senior Analyst Brian Bellinger questioned this business model. The fund was short CXRX, Valeant and Insys Therapeutics Inc (NASDAQ:INSY). Looking at CXRX’s business model, the Raging Capital team saw it as “hitting a wall at high speed.” Having slashed research and development, there were no new products in the pipeline to boost revenues.With the company’s branded drug portfolio witnessing “dramatic volume and revenue declines,” Raging Capital weren’t too impressed with what they called “aggressive channel stuffing of several of its drugs.” This was a common thread in the general business model, a consistency in rolling-up drug companies and then raising prices.