[BREAKING] As we published this Thursday morning, news broke that Valeant is now under federal investigation in Massachusetts and New York for its drug-pricing practices. VRX shares were down -11.5% at open. Stay tuned here.
Every once in a while, a single company combines virtually all of the market’s most toxic forces. Today I feel it’s my job to expose such a company for the bad investment it is. Here’s why.
It’s got a risky and predatory business model.
It’s leveraged up to the hilt, with $30 billion of debt on just $9 billion in revenue in the trailing 12 months.
It’s on the radar of politicians, which is trouble for shareholders.
And here’s the real problem…
It’s widely owned by investors like you. Even if you don’t realize it, you may own this stock in any of the seven ETFs that hold it as a component.
Already the stock dropped -25% in September. In a Super Crash, it’s going to be much worse. This stock is a yo-yo. It gained +6.48% yesterday, but the day before it lost -4.21%.
Since I warned you Sept. 29 about the potential threat that commodities giant Glencore plc (GLEN.L) poses to the global financial markets, a lot of voices have chimed in agreeing with me. Bank of America published a report on the true size of the potential fallout here (it’s stunning). Then Zero Hedge noted that “The Next Lehman Has Arrived” (although I still feel it’s more of an AIG setup, but the point stands).
Something ridiculous happened, too. The stock has gone up.
But not for a good reason.
As I’ll show you, it looks like the rise in the company’s stock price was largely a matter of short covering, not investors suddenly deciding that everything is hunky-dory in the House of Glencore. Because that is clearly not the case.
In fact, it is a shining example of exactly what’s wrong with these markets. And I fear individual investors will get caught in the mess and wiped out on a stock like this or some of the others around it. That’s why I want to call out the misapprehensions and lies that are causing this recovery – and show you what’s next.