Crooks

That Valeant story made me mad.

First of all, mad about myself. Then, mad about Sequoia Fund, Lou Simpson, Bill Ackman and even Jason Donville...

Ok, nobody forced me to buy some Valeant shares. I'm the main idiot here. But I trusted all these guys above. I've trusted them too much.

And, for myself, I thought that I knew what I was doing even if I knew that investing without using traditional metrics was a risky move. But I was convinced by what I read about Mike Pearson and Valeant. And I was blinded by the great results of some big Valeant shareholders like Sequoia Fund, Bill Ackman, Lou Simpson, Jason Donville and a couple of others (some great investors from Quebec like Bernard Mooney and François Rochon owned Valeant shares too).

Lesson learned: If the metrics of a company aren't used in a traditional way, forget it. Fuck all those companies that use ADJUSTED metrics. Like adjusted ROE. Adjusted EPS. Adjusted management performance. Adjusted SHIT.

Fuck Patient Home Monitoring. Fuck Valeant. Fuck Concordia Healthcare. Fuck all that shit that have more chances to be run by crooks than those companies that are using traditional metrics. It's way easier to manipulate numbers when you adjust them. If you adjust it correctly, you'll make a pile of shit look like a gold nugget.

It's been painful for me. Very painful because I've lost maybe a year of performance with that scandal. But it opened my eyes. And here's some lessons painfully learned:

• Never invest again in a company that doesn't use traditional metrics;
• Never trust again all those superinvestors (I won't reproduce their moves but I'll take them as a bonus if they chose the same companies as me);
• Never believe what anybody says on television. I still trust Jason Donville and still believe that he's one of the best in Canada, but I'm pretty disappointed about his fall appearance on BNN about Valeant as previously said. Everybody having media exposure without any exception is using that exposure at their benefit. 
• In retrospect, you have to be the judge of what is good and what's not good. So, better read a couple of good books about investing as soon as fucking possible to get rid of all the people that want to convince you to buy the same thing as them (to pump the price of their shares). 

Bob Goldfarb, the great, great investor at Sequoia Fund resigns today from his position at the fund, because of that Valeant scandal. So, some heads rolled and a lot of people including myself must learn lessons about that story.

To conclude, here's some words of Buffett about the use of EBITDA (which is used a lot with companies like VRX, CXR, PHM and many others):

"We’ll (Berkshire Hathaway) never buy a company when the managers talk about EBITDA. There are more frauds talking about EBITDA. That term has never appeared in the annual reports of companies like Wal-Mart, General Electric, or Microsoft. The fraudsters are trying to con you or they’re trying to con themselves. Interest and taxes are real expenses. Depreciation is the worst kind of expense: You buy an asset first and then pay a deduction, and you don’t get the tax benefit until you start making money. We have found that many of the crooks look like crooks. They are usually people that tell you things that are too good to be true. They have a smell about them."