Do you believe in reversal of situations?
OK, Apple did a spectacular turn-around when Steve Jobs came back in the late 90's, but you have probably 50 examples of a business going to the wall and hurting the wall for a business going to the wall and avoiding it. I don't understand why we should go for a risky situation with a business not safe/that tries to reinvent itself instead of a business that's selling the same thing for 20 years, away from media exposure (ex: Richelieu Hardware, LKQ, Ross Stores).
Today, we learn that Valeant sold 2,1 billion US dollars of assets to L'Oréal and to a chinese business. Wow, the debt of the company will go down... a bit. And so what? The debt may go down but the business is smaller too. And more than anything else, it doesn't look like a period where Valeant could sell it's assets in a position of strength. In fact, there's a pressure on Valeant which is comparable to the weight of the water at the bottom of the Mariana Trench. You should go there to understand what I'm writing. Some say it's not very comfortable.
There's so much business out there, why bet on a stock which has 10% of chances of success, whatever the price is (5-10-15 times earnings) when you can invest in a lot of quiet stocks that have never been related to any scandal or crisis and which has steady earnings... and that's avalaible at 15-20 times earnings? I know, I wrote something similar in the past, but today, a lot of people were writing about Valeant on Seeking Alpha, writing stuff like: "Shorts will cover their ass now!"
Come on, Valeant was toxic one year ago. It's radioactive now. It's a panic selling of assets due to popular and insider pression. It's not good. Look elsewhere and forgive Mike Pearson for his sins. Anyway, he will burn in hell for what he did.
Which brings me to my question: Do you believe in turn-around? If the answer is yes, which percentage of your portfolio is related to these turn-around?