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Takeaway: Do your job because everyone is watching all of the time.

NOTHING NEW UNDER THE SUN

Growth at Valeant accelerated when they bought Philidor in the fall of 2014. When we saw the 3Q result, it was confusing.  How could a business with little to no internal investment see growth break out to mid teens from low single digits over night?  Now we know, and now the payors know.  The payors who are in the process of reviewing their claims data and writing new claims edits and will be likely scrutinizing every claim for a Valeant product from now on. 

CLICK HERE FOR THE ORIGINAL DECK

VRX | WHAT A BUNCH OF SCUMBAGS - VRX growth

VRX | WHAT A BUNCH OF SCUMBAGS - VRX Philador

ANGRY AND ASHAMED 

I don't have to be a super smart hedge fund guy to see Valeant and the cast of rogues for what it is.  As an industry, we should all be ashamed that malignancies like Valeant, Bill Ackman, Pearson, and their deformed brain-child Philidor were allowed to flourish even for a brief period of time.  

INVESTING IN THE AGE OF TRANSPARENCY

Either Pershing knew that Valeant had Philidor in their back pocket and how the company was driving growth, and should not be trusted with managing money... or they didn't know, and can't do their job.  It is more true because everyone is looking all of the time.  

Most people getting up to go to work this morning don't have the slightest clue who any of these rich guys are.  But to everyone who didn't do their job; the reporters who stand idly by warming their ratings, clicks, and views by the media fire storm, the sellside and their "buy" ratings, the buyside that didn't do their own research, Valeant is a loud and clear warning.  How you behave and the quality and integrity of your work when no one is looking is not an anachronism. Do your job because everyone is watching all of the time.

Thomas Tobin
Managing Director 

@HedgeyeHC

Andrew Freedman

Analyst

@HedgeyeHIT