Valeant Fire Sale -- Value Play?

"StreetofBulls"

Personally I would never label a company like Valeant as a "value play", regardless of how cheap it gets. Just because a company trades at a significant discount to its historical valuation doesn't mean it's a good buy-- in fact, these are exactly the value traps you should look out for. Instead, a restructuring/activist play is likely the only way this company's stock will see a rebound.

Ackman's back is against the wall, and with increasing scrutiny placed on big pharma these days alongside the heaps of debt the company acquired through inorganic growth, he's going to have a tough time digging himself out of this one. The reason why Valeant will never be a value play in my eyes is shady accounting practices, uncertainty of management moving forward and I honestly don't see this Valeant's price gouging to be sustainable given the publicity Clinton/Shkreli/et al has brought upon over the last year or so. Perhaps Valeant could be a good speculative play if you have an opinion on a price floor for the company's stock, but I can see this stock either going to 0 or rallying 100-200%. Personally staying out of this one myself.

I have read that at it's current valuation, there is a non-negligible chance that sometime in the future the company could potentially be an M&A target. This is because there are probably at least one or two good and extremely cheap businesses (haven't personally done the research) rolled up in Valeant.

I think that contingent upon either 1) long-term price rebound potential, or 2) possibility of being acquired, it could be an interesting buy and hold. I agree with you that it would probably teeter more into speculation than investing.