We have not liked this company for a long time and recently reiterated our concern in various blogs. In the last one we referred to this stock as a pure momentum play, that is a mindless desire to own this stock purely and solely on the basis that there will be a greater fool around the corner. Because nobody knows why they own it, there are enormous air pockets and huge daily moves are possible and even likely.
Today the guys and gals at Citron research claim that they have found the smoking gun and compared the stock to Enron and have adjusted their target price to $50. The full report is available at http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf
Some of the interesting points from the report are that you should be suspicious of companies that buy or create subsidiaries that are consolidated in the financials. This creates a whole host of possibilities to commit a lot of different sins that are not readily apparent. Also be wary of CEO’s that have spent a lifetime in protected environments like think-tanks or consulting firms and then, with zero real experience, jump in to run the business.
We are not able to verify the correctness of the above report but our own first target was a wave 4 of previous degree level around $120. EW does not concern itself with fundamentals.
The low this afternoon, so far at least, was $116,90 which is below our first target.