Why Valeant Pharmaceuticals Intl. Inc. Shares Popped

Valeant introduces its fiscal 2014 guidance.

Jan 7, 2014 at 1:55PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Valeant Pharmaceuticals (NYSE:VRX) shot higher by as much as 12% after the Canadian pharmaceutical and medical devices giant introduced its revenue and earnings-per-share forecast for fiscal 2014.

So what: According to a Reuters report today, Valeant projected revenue in the range of $8.2 billion-$8.6 billion -- an approximately 40% increase from the previous year -- with adjusted EPS of $8.25-$8.75. By comparison, Wall Street estimates are calling for $8.71 in EPS on just $8.28 billion in revenue. Keep in mind that much of this growth derives from its purchase of Bausch & Lomb last year, but it points to an ongoing trend from Valeant of growth through acquisitions. Just last month, Solta Medical (NASDAQ:SLTM) also agreed to be acquired by Valeant.

Now what: There are two ways to grow in the pharmaceutical sector: through organic pipeline development or by acquiring successful companies. Both have their risks, but Valeant seems to have chosen the latter. The risk in this method is that proven companies can command hefty buyout premiums that could leave Valeant's profit reeling in comparison to its revenue growth over the next couple years. I do, however, agree with CEO Michael Pearson that Valeant has the potential to become a top-five pharmaceutical company by the end of 2016. As an investor I wouldn't recommend chasing shares higher today, as further acquisitions could pressure Valeant's bottom line, but I would certainly keep it on your watchlist and consider it a potentially attractive buy on any significant weakness.

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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