Valeant, Morgan Stanley, Genocea: Stocks In The Spotlight For The Wrong Reasons Today

Shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) are down by 6.9% after the pharmaceutical giant reported third quarter earnings of $2.74 per share on revenues of $2.79 billion. Although the company beat analysts’ profit expectations, its results apparently underwhelmed nonetheless. Valeant’s stock has been soft since August as investors worry over government probes and potential price regulations. Many in the medical community have criticized Valeant for its ‘buy, cut, and raise’ model of buying pharmaceutical companies, cutting their R&D budgets, and raising drug prices to please shareholders. The model has worked for investors so far, however, as shares of Valeant are still up by 16% year-to-date. If the government does nothing about the price hikes, Valeant is a buy (given the forward P/E of 10.98). However, if the government issues limitations, the company’s prospects are more cloudy.

Hedge funds were bullish on Valeant Pharmaceuticals Intl Inc (NYSE:VRX) in the second quarter. Of the 730 elite funds we track, 98 funds owned $22.02 billion of the company’s shares (representing 29.10% of the float) on June 30, versus 104 funds and $20.11 billion respectively at the end of March. Bill Ackman‘s Pershing Square owns 19.47 million shares, while John Paulson’s Paulson & Co owns 9.0 million shares. Jeffrey Ubben’s ValueAct Capital owns 14.99 million shares.

Disclosure: None