Wednesday, February 24, 2016

Pershing Square: William Ackman Q4 2015


Pershing Square, a hedge fund run by William Ackman

Ooh, William had another laid back quarter, at least in terms of activities that has to be registered with the SEC. So he did more or less nothing and still he was loosing a big chunk of money on one of his holdings. Guess which one?

For the previous report please visit Pershing Square: William Ackman Q3 2015.

Pershing Square, Q4, 2015, William Ackman

Conclusion: Well let us start off with answering the question above - Valeant is the company causing all the grief. Not only to the investors but also to the American population that have been forced to pay outrageous bills for medication that costs almost nothing to produce. Valeant is a vulture company whose existent should be questioned. In some cases governments should start to consider having their own generics company to provide their population with cheap medication as being part of the crucial infrastructure of the nation.

Source: SEC

4 comments:

TomB said...

"Valeant is a vulture company whose existent should be questioned. In some cases governments should start to consider having their own generics company to provide their population with cheap medication as being part of the crucial infrastructure of the nation."

Maybe I can agree on part one of this statement, but definitely not on the bold part. If Valeant's existent should be questioned (I am not that familiar with the circumstances), then the market is taking care of this now, and the investors, managers, ... are getting what they deserve. No need to intervene. Government intervention should be the last option to consider...

Tom

Fredrik von Oberhausen said...

Hi Tom,

In my experience government always intervene. It is only a matter of two different options:

1. Controlled intervention that gives stability
2. Stepping in when shit hits the fan to make up new rules, regulations, fees and punishments.

Personally I prefer #1.
It is my opinion that everything that has to do with the infrastructure in a country should be planned, built and maintained by the government for the greater good of the population. This also strongly decrease the overall costs since every company would not have to built their own system (ex. mobile phone networks such as G3, G4 that today is built by every darn provider which then signal wise interfere with all the other providers etc. leading to poorer quality for the population).

It is simply stupid and stupidity should not be allowed for the purpose of "free market" because that is then just as idiotic as the USSR five year planning only coming from the other side of the coin.

Government always intervene. Always. It is only a matter of when.

TomB said...

Got you. I was not really clear in my first comment: there is no point in governments running their own (generics) facilities. Setting the regulatory environment should be enough. Going to infrastructure: in the UK, for example, the government owns the rail infrastructure, private companies operate the trains on it. This system runs perfectly (or at least better than elsewhere). Government operating facilities is like government operating the trains - a receipe for disaster when you look into countries where things run like that...

In Valeant's case it is possible that they violated the rules, now they get punished. Maybe they stretched the rules and got away with it, for some time. Maybe it was accounting fraud. Maybe something else. Anyway, whatever they did, they did not serve their customers and now the business model seems to proof unsustainable. Worked for some years, people got fooled, but now it is over. That's it. I still see no point in governments running their own generic facilities because of this case.

Best
Tom

Anonymous said...

Hi Tom,

The thing is that the regulatory system will always be one step behind. Sure it will every now and then catch up and probably more so in the US compared to EU where companies at the very best gets slapped on their fingers... In most cases not even that happens and fines are hardly ever paid. UK have happily improved on that point as of late!

Generic might have been to push the border one step too far but I seriously mean that what is generally considered to be infrastructure of a country should be expanded and not further minimized as is often the case today.

In Sweden some schools, eldercare etc. are outsourced to private companies with followed horror stories which will of course always happen to a certain extent but usually not at the level which happen when you try to maximise profits.

-Fredrik von Oberhausen