mercredi 28 octobre 2015

Gilead and Apple

Gilead and Apple results were released yesterday and both results were pretty good. But Mr Market didn't seem to have an erection at all. Ok, maybe a small one with Apple, but jack shit with Gilead.

Me, I had an erection. I don't own shares of Apple anymore but it may very well be the case once again in the future.

To me, Apple and Gilead are very similar:

Two large caps, for which a few products count for a big part of the earnings. Both companies are full of cash (they both actually have much more money than a lot of countries) have a very high ROE, high EPS growth and small PE ratio because investors seem to believe that such high growth can't continue VS limited diversity of products sold.

The only big difference between the two is the sector (commodities VS healthcare).

I'm still amazed how much Gilead share price remains flat whatever the results look like. Holy fuck, the last results were so great and the price of the stock decreased by 2-3%. I can't believe it.

The last results of Apple were great too. This time however, the price of the stock raised by 3-4%, which is not bad. But it should have been much more in my opinion.

Let's take a look at important numbers:

Forward PE ratio: 11
ROE: 41
annual EPS growth last 5 years: 38%

Forward PE ratio : 9
ROE: 93
annual EPS growth last 5 years: 39%

If you analyze the results and read comments on seekingalpha, you can always find reasons to worry about any stock. You can even find some reasons to worry with companies like Apple and Gilead even if they have so much money that they could buy a medium or even a large cap tomorrow without raising any debt.

But come on, let's face it, it would be pretty hard to find companies for which you'll get such exceptional earnings for such a cheap price.

Maybe the two best examples out there of companies that should be part of any portfolio, particularly given the concept of a magic portfolio (Joel Greenblatt).

jeudi 22 octobre 2015

The little story of a fucking panic, for all the motherfuckers out there that follow fucking hypes like they were brainless assholes

On july 23, Valeant shares were sold at 341$ (CAN). At this time, many people didn't like Valeant practices which were (and still are) to buy medium and large pharma companies, make cuts, drop the budget allowed to research and development and rise drugs price. But the stock was still popular and the future of the company looked pretty good.

Three monts later, on october 22, Valeant shares are at 144$ (CAN). What happened in the meantime?

About one month ago, Hillary Clinton wrote some shit on twitter about drug prices that rose too much and Valeant was linked to that comment. A few days later, while their was still a lot of pressure on healthcare stocks, Citron Research, shorting specialists, released an article which was very negative about Valeant. The stock went down a lot.

This week, Citron Research released another article which said that Valeant stocked their drugs in a specialty pharma and the storage was considered as a sale (or something like that). In other words, Valeant sales were probably lower than what was on the quarterly results.

First of all, I have to say that I know a bit about Citron Research. A couple of years ago, I bought a stock which was named Questcor. They had a blockbuster drug (Actar Gel). Citron Research published a lot of articles that made the stock drop like fuck, to a ridiculous level. I don't remember the exact numbers, but I'd say something like a PE of 8, a ROE of 50 and EPS growth of 50% (these numbers are surely incorrect, but the difference between PE and ROE/EPS growth was completely insane).

So, I bought some shares of Questcor. And the results of the company continued to be good. And the stock went up. And Citron Research lost probably a lot of money that they couldn't reinvest to upgrade their fucking website which looks like it's been made in 2002.

I know. A single choice like that doesn't mean that they're always wrong, but I've never liked their approach and kind of writing (titles that look like a fucking magazine for teenagers with exclamation marks everywhere). It doesn't look serious at all. And they use a lot of shortcuts to reach their goal which is too destroy a company image.

Don't get me wrong. Even if my biggest position was Valeant until today (I haven't sold a single share but the price dropped so much that the percentage dropped too), I'm not madly in love with the stock. I don't worship this company. But I think they're very efficient at reducing costs and transform an acquisition in a success in a short period of time.

I want to adress here a few questions which seem obvious to me. But it seems that a lot of people haven't asked themselves about these.

1- How the motherfuck Citron Research didn't release their article before the Hillary Clinton tweet?
2- How the fuck everybody loved Valeant in the summer and now, three months later, everybody hates Valeant, everybody thinks the stock is the worst fraud in history and many dare to tell us that the stock will go to 30 or 50$ pretty soon.
3- How the cunt people were willing to pay almost 350$ for a single share of Valeant and are now ready to sell them for 120 or 140$ EVEN IF NOT ANY FUCKING FUNDAMENTAL HAS CHANGED.
4- Why everybody has a negative opinion nowadays (kinda "I told you so") but almost everybody shut their fucking mouth 3 months ago?
5- What makes Citron a reliable source that should guide your actions?
6- Valeant may not be perfectly clean. I don't know. But a massive fraud that will bring the stock down to 50$? Come on, they've got plenty of popular drugs. They've got Bausch and Lomb. Do you think they sell imaginary products?!?
7- You sell on the news. You surely buy on the news too. So you follow what is popular and flee what isn't. You do exactly what many great investors have told not to do. 
8- You really believe that this stock is junk? Just take a look at the great investors that have a big part of their portfolio in Valeant (Robert Goldfarb, Bill Ackman and Lou Simpson who are probably in the top 10). They may be wrong, but if they're wrong, it means that they act like all you fuckers and fuck, I want to die if that's the case.
9- Stop that fucking bullshit about Valeant's model which can't continue forever (cutting R&D expenses). What tells you that Valeant will follow the same track forever? Do you believe they're too stupid to adapt their style in the future? Is that because you are idiots who have lived your life doing always the same fucking thing from 0 to 80 years old?


lundi 19 octobre 2015

Latest top picks (october 19th, 2015)

Us, canadians, will get a new government tonight. It'll sure be a liberal government after 10 years of a conservative government. I'm a bit sad, because except for being crazy people with far west values, conservatives were the best ones when it was time for economics and measures to help middle and higher classes (something that doesn't happen very often in Canada and even less in the province of Quebec).

So, what will happen with the TFSA or CELI (as we say in french)? It will probably be back to 5000 or 5500$. And maybe it will be deleted. Fuck. I think that this measure was probably the best that was initiated in Canada for the last 20 or 30 years. Maybe the best measure since confederation (governments usually create things for taxation purposes, not to allow people to get richer).

Well, fuck all that, we've got to get on with these. Gotta compete with the wily japanese.

It's always time for a Pink Floyd sentence. And it's even more always time to come back to a Jason Donville's appearance on television. And tonight, Jason was on BNN. His three top picks were three stocks that I own: Valeant, Concordia Healthcare and Nobilis Health.

First of all, thank you Jason for pumping my shares. It's almost certain that Concordia and Nobilis will be up a lot tomorrow. However, Valeant may not be impacted because the market cap is much too high.

I share the optimism of Jason Donville for Valeant. Have you seen their results released today? They were excellent. I can't see how anybody could say that those were bad results. Like Jason, I'm pretty sure that the stock will be much higher a year from now (I'd guess it will be at least 350$).

Concordia is perceived by many many many people as a junior Valeant. If Valeant gets hit, Concordia usually gets hit. The stock is down like crazy these days. I think it should be at last twice this price and yeah, like Jason said tonight, it may very well be bought by a larger company at this price. For myself, I added a lot to my position recently (maybe 35-40% more).

Nobilis Health has been hit pretty bad by a negative article on Seeking Alpha. In a few words, the article told that this company buys cheap (mediocre) hospitals that don't return much money. I'm not so sure about the accuracy of the article, but as I said before, I doubt more and more about small caps. So I don't think I'm in Nobilis for the long term. My position isn't that big, but I ask myself some questions about this company. Not negative questions, just questions related to the small cap aspect. I however have to say that I believe much more in Nobilis Health than I believe in Patient Home Monitoring (PHM.V).

To conclude, I don't know if you read some articles that I wrote in the summer of 2014. Just take a look at the last one, for instance. In this article, I wrote that:

1 appearance out of 6 would give us three top picks that showed great results.
2 appearances out of 6 would give us two or three top picks that showed great results.
6 appearances out of 6 would give us at least one top pick that showed great results.

We never know, but tonight, I'd guess that Jason may get results that were above is average results. In other words, I'd guess that at least two of his top picks will be much higher at the same time next year.

mardi 13 octobre 2015

Jason Donville VS Fabrice Taylor VS Bruce Campbell VS Christine Poole

I take a look at a few times per week. Most of the analysts don’t do much for me. They select Netflix as a Top Pick? What the fuck. They only recommend natural resources companies? What the motherfuck? I can’t follow that kind of people.

I really believe that most of the analysts are worthless. Not very imaginative, not useful and without any financial skills for most of them. Just take a look at the recommandations VS the ROE of the companies selected. Most of them have a low ROE and a track record which is only average.
How come these people have any exposure?

It's been said before but the best analyst is without a doubt Jason Donville. After him, but no so close, there’s Fabrice Taylor. And there may be two or three others (maximum), like Bruce Campbell and Christine Poole. Except for these 4 analysts on, I’d say : forget it. Don’t even bother to read what the others are talking about because it’s probably just shit.

Last year, I made an analysis about recommendations from Jason Donville VS recommendations from Fabrice Taylor. Now, I’ll add two other names (Christine and Bruce) and we’ll take a look at the results of the top picks of these four people over the last year.

Three important considerations :
  • They never appear on TV at the same time, so, their results aren’t for the same period of time. I’ve however tried to chose times that were as close as possible;
  • This analysis only compares THREE top picks for each of these 4 analysts. It’s not based on 5 years of close following.
  • To do the math, I've selected the price of the top pick the day BEFORE it was a top pick. For example, if Constellation Software was a top pick on october 24th, I take the price on october 23.

Jason Donville, october 24, 2014

Top picks: 
Constellation Software (CSU.TO) UP 84%
Cipher Pharma (CPH.TO) DOWN 53%
CGI Group (GIB-A.TO) UP 29%

Fabrice Taylor, october 15, 2014

Top picks:
Diversified Royalties (DIV.TO) UP 13%
Delavaco Residential (DVO-U.V) DOWN 75%
Vecima Network (VCM.TO) UP 45%

Bruce Campbell (Stone Castle Investment), october 22, 2014

Top picks:
Patient Home Monitoring (PHM.V) UP 41%
Slyce Inc. (SLC.V)  DOWN 51%
Concordia Healthcare (CXR.TO) UP 20%

Christine Poole, october 7, 2014

Top picks:
Emerson Electric (EMR.N) DOWN 25%
Enbridge (ENB.TO) UP 6%
Manulife (MFC.TO) DOWN 14%

Even with such a bad top pick as Cipher Pharma, Jason still kicks their asses and pussy!

lundi 12 octobre 2015

The benefits of diversification.

A lot of investors talk about their stock like other people talk about religion: with too much conviction.

It happens in various ways: all the way while they own their stock, after an acquisition, after a decision made by the government, or simply because they want to pump their fucking shares on any occasion.

Other people are the same, the other way: they hate so much a stock that they jump on every occasion to put down the stock. If the stock drops a lot, they'll write or say: "I told you so!". If they are financial analysts, they'll write a short thesis after a big drop, jumping on the occasion to get some exposure in a tumultuous period.

Both ways make me sick like I've got the fucking Ebola. It makes me want to shit my guts and die.

A little exageration here, but, come on, versus the stock market and many many stocks, we are all blind or we have a very limited view about internal affairs of a business.

Have you read the thesis of Citron Research about Valeant? Or the writing on Seeking Alpha about Nobilis Health? Both of these are out in a period where almost everybody is anxious about what will happen with Healthcare stocks. I can't take these writings seriously but it looks like a lot of people do.

I could be excited and tell myself that it's a good period to buy more. But I still have a lot of money invested in these stocks.

More, I say to myself that the people who bought these stocks are easy to manipulate. Didn't they do their due diligence before buying? Do they doubt so much about their choices that any negative review make them feel nervous at the point to selling their shares with a loss?

Nothing new here, I've already written about how much market reactions make me ill. But I have to be honest here: With about 50% of my portfolio in Healthcare stocks, I've been too concentrated in the last few months. I'm sick about market reactions, but my sickness is partially due to myself.

I still believe a lot in healthcare stocks. But 50% is too much. Maybe the proportion should be 25 to 35% and not much more. I however think that this sector should be the largest in a portfolio. It's defensive and agressive at the same time. You'll get a low beta too. And as time goes by, more and more people will get ill and more and more people will die, simply because more and more people live on earth.

mercredi 7 octobre 2015

Not fucking related to the stock market

I just found out that very funny video on Youtube. It's about the trickiest games on the original Nintendo (NES). Just take a look at it. The guy that narrates uses just the same fucking language as I do!

Wow. This is my cosmic brother.