Andrew Left’s Shadow Looms Over Mallinckrodt

In lieu of $VRX plummeting through the floor boards and the specter of Andrew Left from Citron Research scheduled to appear on CNBC to discuss the situation, has the shares of MNK are positively plunging lower, down more than 17%.

Since A. Left is bearish on MNK, you’d be absolutely bereft of clear thinking to be long this stock ahead of a Citron media appearance.

Pershing Square is trying to stem the flow of blood flowing from its orifice. Ackman took the time out from his busy day of losing $600 million to tell the world that Pershing isn’t playing games anymore. The fucking games are over.

Ackman means business now.

Dear Pershing Square Investor, Today, Valeant reported preliminary unaudited earnings for Q4, updated guidance for Q1, full year 2016 and the next twelve months. In particular, management shocked the market with revenue and earnings guidance for the next twelve months (Q2 2016 to Q1 2017) which does not appear to foot with continued favorable prescription trends and management’s commentary on the call about the strength of the underlying businesses. Furthermore, the company’s 10-K has been delayed requiring the company seek a waiver under its credit agreement. While we believe that it is highly likely that the banks will provide a waiver, uncertainty about the potential for a default creates enormous investor fear.”

“The above factors have caused investors to lose total confidence in the company as reflected by the current 44% decline in Valeant’s stock price.”

“Last week, Steve Fraidin, our Vice Chairman, joined the board. We are going to take a much more proactive role at the company to protect and maximize the value of our investment. We continue to believe that the value of the underlying business franchises that comprise Valeant are worth multiples of the current market price. Getting to those values, however, will require restoration of shareholder confidence in the management and governance of the company.”

The 40%+ plunge in VRX is definitely imposing itself onto the share prices of biotech stocks, as well as a wide array of healthcare related stocks. There are scores of double digit losses being absorbed today, in spite of the minor losses present in the broader indices.

Healthcare, in general, is under severe pressure today.

More often than not, a bad actor which crushes the prices of its industry peers is usually a buying opportunity for the unrelated stocks. However, in this case, the story might drag on for a while. Plus anyway, the wide majority of the biotech sector is unprofitable, very young, and laden with shareholder bases who are ignorant to their business models and will flee at the first sign of trouble.

This is easily the biggest story of 2016. The once mighty VRX, with its hefty market cap and pernicious business model, has fallen. The men who supported its heft and insidious schemes have been given a Viking Funeral. Their ashes have been strewn across Wall Street for others to take notice and to fear the deleterious effects of unbridled hubris.

Faber sums up the quarterly disaster and Cramer offers his insight into this unbelievable story.

Shares of Valeant are down $29, or 41% for the day–down from an all-time high of $259.

It’s worth mentioning, Andrew Left from Citron Research warned everyone of this eventuality many month’s before everyone else. Major props goes out to him and his staff.

This was forwarded to me from @Lance0333 on Twitter.

Allergan’s case against accepting Valeant’s takeover bid.

I almost feel bad doing this. After all, billionaires (extra Bernie Sanders) have feelings too. But the peril Bill Ackman and his cohorts face now were brought on by their own hubris. These brush fires were lit a few years ago, when they used VRX to make a bid for AGN, clearly an insider trading scheme that was permitted to go unchecked. The net result was Pershing Square concentrating 40% of their fund in AGN, into a self-directed, Valeant led, buyout offer–which resulted in a 40% return for the Man from Montauk.

Ironically, he is now being hung by his own petard in the burning house of cards, which is VRX–currently off by a staggering  40%.

Here are Pershing Square’s positions. Should this decline in VRX force redemptions, which is bound to happen en masse, the following stocks might come under pressure–as he liquidates the fund.

And let’s not forget this.

Ackman is short 20 million shares and is exposed to a short squeeze, now that his fund is being shredded.

I love how these psychopaths are so anti-fossil fuel, yet use said fossils when flying in airplanes, cars, heating of homes etc. I’d love to be able to forgo my addiction to dirty fossil fuels. But the windmill and hideously ugly solar panels just aren’t doing it for me.

Obama, in an effort to secure his super liberal bonafides, reversed an earlier decision which gave the states of Georgia, Virginia, S. Carolina and N. Carolina permission to tar their beaches with light sweet crude. They are no longer permitted to do suchness.

“Any new offshore drilling will be a stain on President Obama’s climate legacy,” May Boeve, executive director of the group 350.org, said in a statement Monday. “If the president is going to meet the targets he agreed to at the climate talks in Paris, he needs to keep fossil fuels in the ground or in this case, under the sea. We can’t afford any more oil spilling into the oceans and carbon pouring into the atmosphere.”

Shares of VRX are plunging, in earnest, right now–off by almost $20 or 30%. The company missed expectations by a football field. But I suspect the verbiage in their conference call, regarding covenants that might be breached, which can cause a default, is what’s spooking investors.

• Net leverage to pro forma adjusted EBITDA per credit agreement expected to be ~5x by year end 2016
• Credit agreement — March 30th: 10-K due; default if not delivered — 30 days to cure default by delivering 10-K (if not filed by March 30th) — April 29th: event of default if 10-K is not delivered
• Bond indentures — March 16th: If 10-K not filed, breach of the reporting covenant in the indentures; trustee or holders of at least 25% of any series of notes may deliver a notice of default — 60 days from the date of receipt of a notice of default to file the 10-K and thereby cure the default
• Launching process with bank lenders next week to seek to extend deadline for filing our 10-K and Q1 10-Q, and waive cross-default arising from breach of reporting covenant in the indentures
• Plans to pay down $1.7 bln debt this year

According to recent filings, Pershing Square owns about 20 million shares of VRX. Valueact, Sequoia and Paulson are also major shareholders. The hedge fund industry are racked with immeasurable losses today, long this bullshit stock from absurdly high levels.

VRX has more than $30 billion in debt. With today’s drop in share price, their debt/eq level is approaching 2x.

Never trust the positive comments out of a CEOs mouth right after he warns. Nevertheless, that’s exactly what NUE did this morning. Maybe they will do better than 2015. Given that 2015 was nothing short of disaster for the industry, I’d say the bar is quite low.

Co issues downside guidance for Q1 (Mar), sees EPS (excluding $0.03 LIFO charge) of $0.23-0.28, excluding non-recurring items, vs. $0.32 Capital IQ Consensus Estimate.
Nucor expects first quarter results to be in the range of $0.20 to $0.25 per diluted share. Projected first quarter of 2016 results include an estimated LIFO expense of $15.0 million ($0.03 per diluted share), compared to a credit of $217.8 million ($0.41 per diluted share) in the fourth quarter of 2015 and a credit of $16.5 million ($0.03 per diluted share) in the first quarter of 2015.
“Although conditions in world markets remain uncertain, we now believe that full year 2016 profitability will be slightly improved compared to full year 2015 results, excluding the impairment charges taken in the prior year. This improved performance is driven by expected increases in the performance of the steel mills and steel products segments.”

Nucor’s stock has been on a tear throughout 2016.

Apparently, he’s disappointed by retail sales.

I get the sense that Cramer, and many others of his ilk, put on elaborate acting demonstrations in order to try to sway public opinion, and ultimately Fed policy, towards a path of accommodation. He’s doing them a favor, quite frankly. But you know, deep down, Cramer is effervescently bullish.

European indices are lower from 0.7-1.5%, continent-wide.  The largest losses are overly abundant in the banks, even more so than their energy companies.

Here in the states, Dow futures are off by 91.