Valeant Pharmaceuticals International, Inc.
VRX
position
short
John Hempton, Bronte Capital
Thesis
Valeant was trading at 10x revenue despite making a loss, with adjusted accounting claiming a 55% margin. The company was involved in unethical practices, and despite being well-funded, it was expected to go bust due to unsustainable business practices.
Did it work?
failed
confidence: high
The stock price increased by 78.1%, which contradicts the short thesis that anticipated a decline due to unsustainable business practices. The significant rise in price suggests that the market did not react negatively to the company's financials or ethical concerns as expected. Therefore, the thesis did not play out as anticipated.
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