Saturday, October 24, 2015

The BNN - Valeant Rant:

According to Donville Kent Asset Management chief executive Jason Donville – the “Capital markets are at risk” after the Valeant attack by “some unregulated guy in Nevada”. It seems Donville and his clients along with “some poor guy in Saskatoon” were caught in last week’s Valeant torpedo-like collapse. You san see the BNN Donville - Valeant clip at

In the BNN clip Donville was making a valid point about some short sellers being “unregulated” and “accountable to no one” until Donville quoted “Ken of Costco” who thinks the accounting at Valeant is OK. In reality the “Ken of Costco” is Kenneth Gerard Langone Sr., an American businessman and investor best known for co-founding The Home Depot. He has an estimated net worth of $2.5 billion according to Forbes. I saw the interview on CNBC where “Ken” along with former Medtronic CEO Bill George, discusses the controversy surrounding allegation of improper accounting at Valeant Pharmaceuticals - there's a 'lot of smoke': Bill George Thursday, 22 Oct 2015 | 8:17 AM ET

Yes – Langone (who is likely unregulated) does say he thinks the Valeant accounting is OK – but then also says he would not invest because he does like the roll-up business model which requires bigger and bigger acquisitions to keep up the growth rate.

On the technical side – Valeant on the week of Sept 25, 2015 broke down below the 40-week (200-day) for only the third time since 2009. The price MOM peaked in April 2015 with the money flow numbers turning down in late August 2015. The current torpedo was a surprise – but then again so was the Sino-Forest fiasco.

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