Short term thinking

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Valeant Pharmaceuticals has made a multi billion (is it 50 billion? ) offer for Allergan. The latter is fighting the offer due to Valeants track record.

Valeants buys up companies, fires their R&D staff and boosts it’s revenues and earning by just focusing on the products that the acquired company has in the market. It’s Rand D budgets is only 1 pct of its revenues. (Industry average is 15 pct probably).

The result of this destructive approach is it needs to make bigger and bigger acquisitions to maintain its earnings and revenue growth.

One things is for sure. This is not sustainable long term. So Valeant investors won’t be around long enough to need Botox.

Contents from WSJ last week.
Numbers from memory.

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Re: Short term thinking

So dear readers, what do you think of such short sightedness? Is this now par for the course? Do these CEOs need a visit to the optician ’ s office?

Bonus question - does this mean we ought to be long the eye care industry?

Discuss.

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Re: Short term thinking

To those who sent queries re Valeants returns 895 pct in probably 10 yrs. So the short term focus has paid off. Short term.

Future returns may be bleak. But our Technical Analysts assure us it has strong price action, with stock above all sorts of moving and stationary averages.