Lumber Liquidators LL Tesla Whitney Tilson K12 Questcor Pharmaceuticals QCOR

Whitney Tilson Announces New Short Position In Questcor

Whitney Tilson discloses a new short in Questcor Pharmaceuticals Inc (NASDAQ:QCOR) (via email sent to ValueWalk)

Also see The Strange Case Of Lakewood And Opko HealthWhitney Tilson on his new big shortWhitney Tilson on ‘My response to Dear Whitney – Are we having fun yet?’Whitney Tilson Bullish On Samsung, Backs Up Lakewood On OPK and  Whitney Tilson On Why He Loves 3D Systems As a Short

Whitney Tilson on  Questcor

I hadn’t gotten around to writing about one of my newest short positions, Questcor Pharmaceuticals Inc (NASDAQ:QCOR), so I owe a debt of gratitude to this article in tomorrow’s NY Times, which does a nice job of laying out key parts of what I believe is a scam of epic proportions (I’ve also included the recent Barron’s and Seeking Alpha articles that the NYT article links to).

You really can’t make this one up. Just over six years ago in Aug. 2007, this stock was at $0.35 – so how did it increase 158x to today’s closing price of $55.18, giving this former penny stock a $3.3 billion market cap? Easy: just increase the price of its one product (H.P. Acthar Gel, a 60+ year old drug acquired for $100,000) from $40 to more than $28,000 a vial (that’s not a typo – a 700x increase!). Believe it or not, our insane healthcare system allows this, as insurers are paying it – which, of course, means that all of us are.

Questcor Pharmaceuticals Inc (NASDAQ:QCOR) has done all sorts of questionable things to juice Acthar sales so various investigators are circling and medical professionals are asking tough questions, so the smart money is betting that this is a house of cards about to collapse (38% of the float is short). But in the meantime, many investors, cheered on by Wall St. “analysts”, are drawn to the company’s rapid growth, sky-high 40% after-tax margins, and modest valuation (12.7x trailing EPS and 7.2x EV/EBITDA).

 

The bulls have been winning this battle so far – see the three articles below in Barron’s and StreetSweeper and the Citron report from 2011 and 2012, when the stock was much lower – but I think the gig is just about up.

PS—Sometimes it’s better to be lucky than good. Had I learned of this company a couple of years ago and read the articles below and attached, I probably would have shorted it. But instead I came late to the party – so was able to short it last month (my average cost is over $60), which probably makes me one of the few people who’s ever shorted this stock who’s in the money!

Whitney Tilson K12 Questcor Pharmaceuticals QCOR

Courtesy of Kase Capital

Drug Maker’s Donations to Co-Pay Charity Face Scrutiny

By ANDREW POLLACK
Published: December 18, 2013 80 Comments

As drug prices have soared in recent years and insurers have increased co-payments, a new type of charity has blossomed to fill a vital niche — helping patients pay the steep out-of-pocket costs for their medicines.

Too Close for Comfort?

By BILL ALPERT | MORE ARTICLES BY AUTHOR

Drug company Questcor is both a donor and a beneficiary of a fast-growing medical charity. That could give investors aches and pains.

Off-duty cops secured the meeting rooms at the Gaylord Texan Resort last month, as the Chronic Disease Fund held its yearly conference at the Dallas-area hotel. Days before, the medical charity had canceled the registrations of some would-be attendees and refunded their $1,500 donations. The uninvited then got threatening lawyers’ letters from Questcor Pharmaceuticals, a drug company that’s been a backer of the charity and a bug zapper for short sellers.

Questcor’s letters said the barred guests must have bought tickets for the charity’s fundraiser and conference to get nonpublic information and manipulate Questcor stock (ticker: QCOR). Those letters, which several Wall Street recipients showed to Barron’s, told the interlopers to prepare for litigation and to stop contacting the Chronic Disease Fund and its affiliates.

Questcor And The Chronic Disease Fund: Is Free Drug Truly Free?

Oct 22 2013, 14:21  | 51 comments  |  about: QCOR

 

Ikarian Point Research

http://seekingalpha.com/article/1760862-questcor-and-the-chronic-disease-fund-is-free-drug-truly-free

Disclosure: I am short QCOR(More…)

In February of this year, we posted an article on Value Investors Club detailing the aggressive accounting used by Linn Energy (LINE). Subsequently, on July 1, LINE announced that the SEC launched an investigation into LINE’s usage of problematic accounting practices that artificially inflate their reported distributable cash flow (DCF). The result was an immediate 32% stock price decline and the real possibility that LINE’s $4 billion acquisition of Berry Petroleum (BRY) will be scuttled. Questcor (QCOR) is another company with some questionable dealings and it is already being investigated by the U.S. Attorney General’s Office in Pennsylvania. In particular, we question the manner in which Questcor conducts its free drug program in conjunction with the Chronic Disease Fund. Given the issues we raise with Questcor detailed below, we wonder what may come next.

Despite the fact that Questcor appears optically cheap, trading at just 13x 2013E EPS, we believe the company’s increasing reliance on its co-pay and free drug programs operated in conjunction with the CDF can potentially put earnings at great risk as these programs are scrutinized.

Comments (3)

  • disqus_qHe0DkCiK0

    Yes only QCOR is helped by the CDF. not – I don’t hear you talk about the other 75 drugs or many other companies involved. Oh only QCOR has an expensive drug. I don’t hear you talking about the industry. Didn’t GILD just have a drug approved and the therapy is 110k. Go short them. Your article is misleading and I hope you lose all your money.

    December 19, 2013 at 8:12 am
  • jerryparker7

    not a smart guy from what i’ve read – according to wiki on Tilson. follow him at your own peril.:
    When Google had it’s IPO in 2004, Tilson famously said in 2004 Motley Fool article, “Google with the same market cap of McDonald’s (a stock I own)?! HA! I believe that it is virtually certain that Google’s stock will be highly disappointing to investors foolish enough to participate in its overhyped offering — you can hold me to that.” [7] Note: Since then (as of 10/18/13) Google has gone on to give it’s investors over a 1050% return

    December 19, 2013 at 9:27 am
  • DisserExtroadinaire

    Plenty of other suckers who were glib about being one of the only shorts “in the money”, only to have their arses handed to them a few months later.

    December 21, 2013 at 9:20 am

LEAVE A COMMENT


X
Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Are you an intelligent investor?

ValueWalkPremium is a website and newsletter for smart investors like yourself. We focus on the latest hedge fund industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today for only a few dollars a day and get a 3 day no obligation trial with a targeted 20% discount coupon code.

Cancel anytime during trial and you are never charged.

Limited time offer: For first 50 subscribers

0