Investment Q&A

Q: I am sure by now 5i must roll its collective eyes at the sight of another CXR question.
I don't own the stock but find it fascinating. Some analysts predict 2017 earnings to be $4-5 per share or even higher. Globeinvestor has their debt to equity at about 3x. My questions are these:
1. what is the major risk that the anticipated earnings don't materialize? gov't intervention? or is there fear that like Valiant there may be some misrepresentation on the books?

2. if debt to capital is 3x, that would mean that there is approx. $60 of debt per share, given a $20 share price. correct?

3. if they are paying an average of 5% interest on their debt, wouldn't interest alone eat most of their earnings? i.e. $3 per share would go just to interest. seems like it would take a very long time to get out of debt.

4. seems like it will be almost impossible for this company to grow by acquisition for a long time, given the environment. almost like a game of musical chairs where the music has stopped for a final time and there is no reason now to own the stock other than value. true?

Thanks for your patience with us as we try to figure this market out.

Cheers
John

Q: my cost on CXR is 23.50 . what would be my downside risk at these levels? I keep hearing about a strategic review. what does this entail and what impact can this have on the stock price?

Q: http://investors.cvshealth.com/~/media/Files/C/CVS-IR-v3/documents/02-aug-2016/2017-standard-formulary-list-of-removals-and-updates.pdf

This may be another part of the reason for the sell-off today. Nilandron appears to have been added to the list of drugs to be removed at CVS for 2017 due to hyperinflation. I'm not sure of the implications as far as the percent of Nilandron historically sold through CVS. I would assume they'd re-negotiate pricing and take a bit of a hit?

Q: Peter & Team, as to the question from Dennis today, the company needs to begin reporting organic growth in Covis and AMCO, preferably be summarized product category. We cannot wait until they cycle up against these acquisitions by end of year to see comparables; we need to know if things are better or worse from when they bought these products. And we need to know it August 12th when they report the quarter.

Reporting against target EBITDA of $610 to $640 million and Net Debt/EBITDA of 5.5x is not cutting it (obviously).

If management won't disclose product growth prior to acquisition date or if there is no constant currency growth, would that not be 5i's cue to cut and run?

Thank you.

Q: Seeing all of the questions about the big drop today and having purchased at higher levels i agree that it's a really frustrating stock. However, i read today that Taylor Asset Management (David Taylor of Dynamic fund fame) and Davis Rea (John O'Connell) actually added to their positions at the end of Q2. They seem to be looking at the fundamentals without emotion and see the value in the company

Q: Could you comment on their latest financial results.

Q: What the heck is going on with CXR?? It has tanked again today down over 16%!
Was there any News in particular that came out this morning? what is the specific reason for such a huge sell off today? I'm weary of the losses I have incurred on this position as it continues on its downtrend amidst the short sellers. I'm down over 50% and think I should throw in the towel....your thoughts on my thoughts of selling? Is there any glimmer of hope for this company in the near term?

Q: Can you comment on this article on Concordia? Thanks. http://www.businessinsider.com/concordia-international-short-thesis-2016-8

Q: Hi,

CXR continues to make new lows. It also trades on the U.S market, where U.S. investors just see a stock continually going down, and it is heavily shorted by U.S. investors. Years back, Jennifer Dowdie, then an editor for the Investors Digest, now with the
Globe & Mail, really liked Sino Forest. Hence, a lot of people owned this stock. Carson Block started shorting this stock and driving the price down... just like with valiant pharmaceuticals. Canadian analysts came on business stations and started criticizing him. In the end, just like valiant pharmaceuticals, he drove the stock way down in the case of Sino Forest right to 0. Is there going to be a time when you will tell us to cut our losses with CXR? Could you guys please do a feature on this stock and publish it? A lot of your customers have holdings in this stock.

Thank you,
Dennis

Q: A link providing some positive outlook for Concordia. I too have big loses. I kept averaging down, last time at 35 and was wondering if it's still a good idea to double down at this levels.

Anyway here is the link:
http://seekingalpha.com/article/3991275-concordia-tickets-might-get-expensive-august-12th?auth_param=199kea:1bpcs0q:1a48c260c25246af48595fe414619095&uprof=45&dr=1

Q: Hi Peter, My question is about CXR I have 600 shares at a loss of 50%, should I cut my loses or hope for some good news.Thanks LIL

Q: Tough to figure out this company's quarterly results due to all the acquisitions and moving parts. I think it looks good. Your thoughts?

Q: PHM is up 34 % today. Any news. CXR continues to drop. Any news explaining the weakness. Thanks

Q: Any reason why PHM is up 30% today?

Q: What is the consensus for Q2 sales and eps in US$?

Q: Where Gilead's earnings bad enough to justify the drubbing they are Taking? Hold on to shares at this point or has something fundamentally changed?

Q: What would you expect as to the possibility of a positive return by purchasing a Jan 20 2017 CXR call with a $29.00 strike price.

Thanks for your insight.

Q: Hi
With CXR stock now under $24.00, would this be a good entry point, or do you think it can still go lower in the short term.
Thanks as always
Guy R.

Q: Hello team. I currently have a small position in Antibe Therapeutics and considering adding more. This is a stage 2 drug company. No profit and sales really that tie in to the real story of the drug being created at the moment. Essentially they are trying to create a pain medication that will compete with the likes of Advil/Tylenol without the negative side effects of damaging the stomach lining and creating ulcers. The most interesting component is that amount of activity of old Paladin Labs/ new Knight Therapeutics people moving in and out of the company, setting up acquisitions and financing deals. Considering you guys cover Knight I was wondering if you had any further analysis or information on Antibe or the financing deals that Knight puts together? Or perhaps you could criticize or add to my qualitative analysis for other areas I should be concerned about?

Pros:
From what I can tell it's the only other company that Johnathan Goodman holds a position in besides Knight.
In the 50% region of insider ownership.
The fact they acquired a sales force shows confidence.

Cons:
One patient got something similar to Jondis, this forced the company back to the drawing board. If the product is not considered safer than Advil, it will have a hard time selling.
Further dilution will have to occur to proceed in product testing.

Q: While I realize that no one has a crystal ball, do you have any thoughts regarding the possible timing of a possible sale of the company or, if not, a decision not to sell for that matter? I wondered if it might be around the next quarters(August 12 ) results when there may be a better understanding of the impact of Brexit on the company's finances. Or do you think that this might require another quarter or so to sort itself out? Any thoughts on the probability of a sale actually happening? At this time the market seems to be discounting any potential sale!