Jerome Hass: Why I Shorted Valeant Near Its Peak

The transcript discusses the financial concerns surrounding a company's acquisition of Salix Pharmaceuticals, which increased its debt to EBITDAR ratio to six times. This raised red flags about the company's ability to take on more debt, affecting its share price and investment strategies. Concerns about leadership, particularly regarding excessive management remuneration, are highlighted. The discussion concludes with a strategic outlook, suggesting a cautious approach due to the crowded short position in the market.

What was the debt to EBITDAR ratio after the acquisition of Salix Pharmaceuticals?

• Five times

• Four times

• Six times

• Seven times

Why did investors' perception change regarding acquisitions after the debt reached six times?

• Acquisitions were seen as less risky

• The company's stock price stabilized

• Acquisitions could no longer be funded by debt alone

• The company started paying dividends

What was a major concern regarding Mike Pearson's leadership?

• His conservative business strategy

• His excessive remuneration

• His focus on innovation

• His lack of experience

What historical example was used to highlight concerns about management practices?

• WorldCom fraud

• Enron scandal

• Lehman Brothers collapse

• Tyco scandal

Why did the analysts decide to exit their short position?

• The market was too crowded on the short side

• The company's financials improved significantly

• The stock price was expected to rise

• The company announced a new acquisition