Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
"Risks and When We'd Sell

Investing in a company that relies so heavily on acquisitions means bearing larger-than-normal risks in two distinct ways. First, we'd have no reason to invest without high confidence in Pearson's record of wealth building (as opposed to mere empire building). If Pearson were to depart, or if other factors (like higher financing costs) meant Valeant couldn't meet the return-on-investment hurdles that drive wealth creation, we'd look for an exit.

Second, less robust organic growth means Valeant needs larger and larger deals to maintain the growth rates that justify today's share price. We're no stranger to this type of challenge; similar challenges plague Berkshire Hathaway, for instance. Still, if the $9 billion Bausch & Lomb deal proves the pinnacle of Valeant's capabilities, we'll end up with mediocre returns and likely look for a new prescription."
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.