Bill Ackman’s Pershing Square holding will be having its quarterly conference call on Monday at 11 AM EST – November 9th 2015 – We are not sure what Ackman will speak about but we are guessing the chart below will be a topic if not discussed much, then at least on his mind. Since Ackman conducted a call recently we expect this one will be short (by Pershing standards) but it is anyone’s guess.

It is hard to keep up with Valeant news but the latest is that they are holding an investor call at 8AM EST tomorrow morning. Ackman has publicly disagreed with Michael Pearson, CEO, Valeant over Pearson’s style of dealing with the latest controversies surrounding the company. Bill Ackman’s obligation is to defend Pershing Square investors (not VRX investors) so will he do so by attacking VRX again or will he tone back his criticism?

Valeant-VRX-versus-Herbalife-HLF Bill Ackman
Bill Ackman HLF short vs VRX long – one year performance – Chart Via S&P CapIQ

In a note from last week analysts from BMO Capital Markets opined:

We find Mr. Ackman’s comments in the Journal puzzling given his expressed confidence in Mr. Pearson during his conference call. Moreover, we believe that virtually all VRX investors recognize that Mr. Pearson has been the chief architect of Valeant’s strategy since he became CEO in 2008, and they attribute much of the company’s success since then to him personally. Therefore, Valeant’s current issues aside, the prospect of not having Mr. Pearson at the helm is probably further eroding investor confidence, which probably explains today’s weakness.

BMO wrote this before Pearson’s margin loan had been called by Goldman Sachs. However, that news likely will have little bearing on wether or not Pershing, Sequoia, Brave Warrior and other large VRX shareholders are interested in a new CEO or whether they will want to stick with Mike.

11:03AM EST Bill Ackman says investors told him calls too detailed so will scale back – interesting performance-wise – declines due to VRX and PAH – Much of it is due to people thinking we will be forced to sell – but we have largest permanent base of capital – we have seven yr bonds, internal capital and offering on public market – you cannot redeem more than 1/8 capital each Q for many investors. We have done well. We are prepared for snide comments from press.

11:10 MDLZ we are really optimistic and we think margins can be higher. We think volume growth will pick up, GM and OM have been very nice but not yet reflected by huge investment in supply chain – those improvements in margins will come in coming years.

11:15: APD had great quarter – was record Q with margins up over 300% and despite huge FX headwinds numbers were still good. We now have 12 months under new CEO and the results have been spectacular. Also spinning off non core business and we think makes great strategic success and will allow better capital allocation. APD needs very high credit rating (or believes it has to) to serve onsite customers – this business which was spun off was under-levered and now they will be able to put on more leverage. Solely on cost savings you can get to ….
Recent strong performance in Asia also suggests enormous opportunity – and company is being very conservative with guidance assuming zero percent growth worldwide.

11:20 Having struggle in this rail industry, but CP has managed to increase productivity with assets and with workers and has weathered the storm. With restructurings to allow workers on hourly basis this should be an improvement going forward.

Assuming no massive increase in demand will not need to purchase more rail carts for seven years or more. FCF is great over $1B over past nine months. Company issued debt to repurchase some outstanding debt and repurchase share at attractive prices. CP can still buy 8% of float and could go up to 10% of it.

11:25 ZTS down 14% – Bill Ackman thinks it had to do completely with human pharma companies because it is grouped together but it shares nothing in common with its peers – it is diversified supplying vets, ranchers (B2B), – with vets no Government reimbursement really. Zoetis management is trying to get analysts to better understand that. Some of selling could have been caused by the company being included in healthcare ETFs, says Bill Ackman.

Despite huge FX headwinds company still have strong quarter and exceeded consensus.

11:30 Bill Ackman says we already did a lot on VRX and are focusing on cash and business lines and asked ourselves what is impact of shutdown of Philidor (sp?). The only business which is Valeant branded is dermatology business which is very unlikely to be impacted by accounting. Their branded generics across the globe are not even known to us – we expect sales to continue strong. Salix will be strong because FDA approved and doctors will prescribe. The only really question is philador and spec pharma and Jordan will discuss that.

Doctors like VRX products and see difference between VRX and alts – Doctors realize need of specialty pharma against their insurer? enemy – Doctors do not have time to fight with insurers – in dermatology in particular cosmetic impact is important – if something looks greasy patients wont use product or ointment, so they keep this in mind along with costs.

11:35 Doctors noted with acne high copay and prior authorization are important factors. VRX are increasingly selling a product portfolio. Co-pay assistance is not new but is ineffective in retail due to patients losing it etc. also misaligned incentives at pharma where they want to prescribe generic but specialty pharma has less of this issue.and that is why doctors like them. A third of doctors we spoke to who use VRX but dont use specialty were interested in hearing more.

Ackman thinks call tomorrow will be managed better and will not be scripted and that should remove 50% of the current issues. We think they mismanaged the PR aspect of this little crisis. Nothing will change over next ten years, we believe. Tomorrow call will be important, then Valeant will be testifying before Congress on December 9th but they should do well despite the politics. Analyst conference before end of year, 10K in February/March – each event will be confidence inspiring. You have had a panic by a “collection” of events which caused marginal investors to sell, then rumors and mid-call Citron said he would release more info then he withdrew. VRX has been a victim of fear and panic. More disclosure will help especially with spec pharma. We heard great things from physicians about this so there will be re-valuation.

Ackman on $AXP scandal – media misinterpreted -I am not comparing myself to Buffett was comparing VRX scandal to AXP oil scandal. However, if I bought after the crisis maybe the comparison would have made sense.

11:50 People think we may be forced sellers also in HHC we have no plans to sell any of these investments and expect to own them for years although we reassess every day but HHC is much better investment now and

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