So the Pershing Square chief and his investors had a nice chat yesterday, one that was pretty remarkable for its civility given that his Valeant habit has cost them a quarter of their investment in the first three months of the year. But like the rap on Valeant that it’s a serial acquirer whose sole business model is to raise prices and slash R&D, calling the first-quarter decline a “loss” is a little misleading. It’s better to think of it as tuition for the school of hard Wall Street knocks.
I describe 'experience' as making mistakes and learning from them. We've made a number of mistakes in Valeant that's required some soul searching on our part ... 'Did we violate some of our investment principals?' ... In fact, we believe there's a lot of learning here. I don't think it's the right moment yet to share our conclusions with regard to the litany of mistakes here. There is a time for that.
Try back in a year or so, once Bill & co. have applied those lessons learned and proprietary conclusions and fixed everything, because you may be surprised to find that the aforementioned tuition was refundable.
We can restore value here very, very quickly. Again, filing the 10-K, new management ... and a few quarters of results, and this stock, we think this stock can be trading at a different price. There's more upside ... certainly in the short term ... than any other investment in our portfolio.
We’ll skip the cheap cliché about there pretty obviously being nowhere to go but up for a stock that’s dropped 90% over the last eight months. But we are curious about which other companies Ackman had in mind when he called Valeant a “classic Pershing Square investment.”