Sold Valeant Pharmaceutical Stock

My Valeant Pharmaceuticals Story [Recent Sell]

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Valeant Pharmaceuticals was the worst investment I could have ever thought of to funnel my very hard-earned money into.

Maybe that’s not 100% true; but it is the worst investment I’ve actually committed to. I saw as the company became the largest Canadian company, surpassing Royal Bank of Canada (RY) in late July, as it approached a Market Capitalization of nearly $112 Billion CAD. The market cap today is $10.5 Billion CAD. That’s a decrease of 96.3% of their value. And all within a couple months; it’s absolutely insane.

Back when it became the largest Canadian company, it caught my eye. I watched it for a little longer as it continued to climb; it seemed as though everyone who was investing in this company was getting rich! I had a little money lying around, and I thought – maybe it was time to expand my portfolio into some pure growth stocks – shifting away with some “fun money” from my dividend growth strategy. I’d read quite a few times, that when it came to playing the stock market as I was about to do, you should “only invest money you’re comfortable losing 100% of” – boy, I didn’t think it would ever actually happen, especially not to me.

After seeing how much the stock had flown and continued to fly daily, and considering I really liked Michael Pearson’s business model at the time, I decided to invest $2, 000 into Valeant shares. That was my second biggest position at the time, and the most I’ve ever invested at once. My traditional purchases are in batches of $1, 500. I was ready to start making money with my 6 VRX shares. Day by day my investment grew and I was pleased with myself… until not long after Citron Research discovered the hidden tie between Valeant and Phillidor Rx Services, which shone a very dark, Enron-esque light on the company.

Valeant then subsequently shed 30% on their share price, and that was the beginning of the end – but I held on; after all, based on some simple things I’d learned from the beginning of my investment journey was to hold when stock prices drop as a dividend growth investor; but this was not a dividend growth stock; in fact, it wasn’t event a dividend stock. In Citron’s early November report, they claimed Valeant was “engaged in manipulation of the insurance reimbursement system, and very possibly the law, to alter their financial results” through Phillidor.

A little after that, Hillary Clinton began to start attacking Valeant for price-gouging along the lines of Turing Pharmaceuticals. Share price continued to drop. Investors shorted the stock like no tomorrow. Continued allegations were whipped against Valeant. Michael Pearson came down with severe pneumonia and an interim-CEO was brought in. The entire thing was a huge mess.

But I held on, believing that the stock price will have to come back up after they release their earnings and commit to a strong, but believable future guidance. Unfortunately, that’s not the information they released last week. Things were a lot worse than that, and after they released lower than expected earnings, dropped future guidance, and announced a potential default on debt – shares fell another 50%. My $2, 000 investment was a pittance at that point – and it was during that day as the share price was down between 40% and 50% until the end of the day that I sold my shares as I wanted what little money I had left there, because I honestly believe the company’s future is now in the dumps and I don’t want to be there. The small money I received for the once $300+ shares could be used to earn me a little something through dividends rather than going to $0.

I learned A LOT from investing in Valeant. I learned exactly what NOT TO DO when making investment decisions, and the difference between when one should hold and sell. Now that I’ve started selling the bad choices I made in the past year, it’s getting easier to admit to myself that I made some bad decisions, and to take action on that realization will make me a stronger investor.

Later this week I’d like to share with all of you what I’ve learned in from my Valeant investment in a list format; it’d make me happy if even only one person learned something from the list. I know that it will help to solidify my investment ideals to have those lessons organized in one neat post.


On March 15th, I sold my full position of 6 shares of Valeant Pharmaceuticals (TSE: VRX) at $50.80 with a trading cost of $6.95, for a total recuperation of $297.85. That’s an 85.3% loss of my original $2,024.45 investment, for a total loss of $1,726.6. Unfortunately that would have been a great amount to invest in a 4% or 5% dividend growth stock for some great returns. Or even a pretty damn great vacation. Live and learn. I’ve accepted it, and most importantly, I’ve learned.

Dividend Beginner

A 22 year old Canadian dividend growth investor striving for early financial independence; building as many passive income streams as early as possible.
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  • Thank you for sharing your experience with investing in Valeant. I am sorry that you lost money on this investment.

    However, now you have learned a valuable lesson. Any time you invest your hard -earned money again in the future, you will be more skeptical in your analysis. You will also be more diversified than before.

    Those lessons will be helpful, when you manage 10- 100 times more money than you do today.

    I wish you good luck in your journey.

    Dividend Growth Investor

    • Hey DGI,

      Thanks for your sympathy. You’re right. I will definitely be far more skeptical in the future, and look at the good and bad side of the business model in more depth. I appreciate you stopping by and commenting.

      DB

  • We all make mistakes DB so don’t be so hard on yourself. Don’t worry what other people are making and aren’t making, worry about yourself and your situation. We can only learn and never to make the same mistakes.
    Thanks for sharing and we live to fight another day! Cheers.

    • Hey Tyler,

      Definitely living around to fight some more. Getting much stronger with every passing month. Can’t even recognize the me from a year ago and hoping it’ll be the same next year.

      DB

  • It is clearly no fun to loss that much money. As I heard on one podcast: it is better to loose early in your investment life, when the stakes are relatively small compared to loosing when you are older and have bigger positions!

    I am looking forward to your lessons learned.

    • Hey amber,

      I definitely agree. All-in-all it was a pretty terrible return, even in relation to my overall portfolio – but in comparison to what it could be in the future I feel decently safe. Investing in small bursts helps with this. Thanks for reading and commenting.

  • Hey DB,

    Sorry to hear, that sucks. I guess it goes to show that just because some companies may be the biggest in the world, like your example or BHP etc they can still crash.

    It’s easy to blame yourself in hindsight, hopefully the lessons you do take from it, help in the future. We learn best from our mistakes, successes can blind us to risk. No-one will have a perfect stock picking record, as much as we are all trying to achieve it.

    Keep the faith 🙂

    Tristan

    • Hi Tristan,

      I guess it’s a good thing my investment track record has already been soiled so I can hopefully escape a couple hard losses to make up for it in the future! Good example there with BHP; things have been really crazy when you look closely. On to more prosperous days.

  • Ouch. Thats a tough loss, but a good story and a great lesson.

    Dont beat yourself up about it. You either win, or you learn!

    Ill definitely be checking in for that list update on Valeant.

    Keep it up reddit bro!

  • Hey DB,

    It sucks, but don’t stress to much about this loss. You’ve learned a lot from it and it’s a necessary tool to become successful over time. It won’t affect your long term goal.

    In the beginning of my investment career, I lost about 6K in one singe stock. I learned so much from it. The 6K loss turned out to be the best investment I’ve made because it taught me on how to properly do my research and how to allocate assets. Since then my investment decisions have changes and haven’t lost a single investment.

    Take care!

    • Hey German,

      That’s a really great story to share man. Thanks so much for that. Hopefully I can react as well as you and not lose on another investment going forward. I’m curious, would you care to share what stock resulted in such a loss for you? Thanks for commenting dude.

      • Hey DB,

        The stock is LTS.TO or formally PBN.TO. This use to be a 20 dollar stock! Now, it’s trading for pennies…

        Oh well. That chapter is done in my book. We have to move on and make better investment choices! We become successful through failure.

        Take care!

  • Thanks for sharing. I feel like these things were happening to me often (especially when I would ‘mess around’ with options playing earnings releases, which is why I started my blog – to help keep myself responsible. We will both learn from our mistakes and keep going. Enjoy your honesty and look forward to following your journey.

    -The Dividend Mogul

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My publishings on dividendbeginner.com references an opinion and is for information or entertainment purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. I am not responsible for any decisions you make concerning finances, taxes, or investments. You must perform your own research and always take caution when extending capital.