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Janus' Gross Says Valeant Based On Leverage, Financial Engineering
FYI: The business model of Valeant Pharmaceuticals International Inc (VRX.TO), target of a securities investigation and under scrutiny for its pricing and accounting practices, "was based on leverage and financial engineering," fund manager Bill Gross of Janus Capital Group Inc (JNS.N) said Tuesday. Regards, Ted http://www.reuters.com/article/us-funds-janus-tweet-idUSKCN0WO2L4
Apparently he didn't share with Andy Acker, the manager of Janus Global Life Sciences:
On a subsector basis, pharmaceuticals were the largest detractor from relative performance. Much of the underperformance was due to one holding, Valeant Pharmaceuticals. The stock sold off after some politicians criticized the company for high drug prices for some of its products treating cardiac conditions. A short seller also questioned the company’s relationship with a specialty pharmacy that distributed some of its drugs. Valeant has since severed its relationship with the specialty pharmacy, and restructured how it will sell its dermatology products. We think the concerns that weighed on the stock this quarter are more than priced in at Valeant’s current valuation. (4Q15 Report)
That's the same language used in the report for the Janus Global Research Growth Equity Composite. The Janus Global Research Fund team varies the wording but not the message:
We believe many of Valeant’s strengths have recently been overlooked, including a number of strong global brands, a high margin, decentralized operating model, and a strong pipeline. We also see further potential for shareholder value creation through deleveraging and bolt-on acquisitions.
Contrarily, Barney Wilson of Janus Fund says, "The Fund’s position in Valeant has added to our overall performance since we first bought the stock. Nevertheless, we sold our shares in the company during the quarter (4Q15) on concerns about some of those business practices."
Doug Rao, who handles their Concentrated Growth separate accounts also bailed, and did so for entirely rational, shareholder-sensitive reasons:
Valeant Pharmaceuticals also detracted. We exited our position due to concerns of some aggressive business practices. We felt the level of uncertainty surrounding those business practices created too high of a risk for a position in a high-conviction portfolio.
Comments
Equity Composite. The Janus Global Research Fund team varies the wording but not the message: Contrarily, Barney Wilson of Janus Fund says, "The Fund’s position in Valeant has added to our overall performance since we first bought the stock. Nevertheless, we sold our shares in the company during the quarter (4Q15) on concerns about some of those business practices."
Doug Rao, who handles their Concentrated Growth separate accounts also bailed, and did so for entirely rational, shareholder-sensitive reasons: For what interest it holds,
David