Why Valeant Pharmaceuticals Intl Inc (NYSE:VRX) May Jump 50% Tomorrow

March 31, 2016

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has had an ugly past 52 weeks. After trading as high as $260 per share, the stock hit a low today of $25.75. So why on earth could it potentially rally 50% in the next month? The answer is surprisingly simple…

 

The last day of the quarter is today. Hedge funds always sell their biggest losers, especially ones with so much media attention into quarter end. They do this to avoid showing the position on their quarterly statement to clients. This creates added down pressure into quarter end. In addition, no hedge funds would buy prior to the new quarter for the same reason of not wanting the position on their statement to clients. That means, come April 1st, 2016, it is a whole new ball game. The selling from hedge funds should have concluded and there will be some hedge fund buyers taking positions. Assuming no negative news from the company, there is 50% upside in this name over the next month.

 

If you are not profiting from trades like these (look here) then you should stop trading and investing!

 

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Gareth Soloway

Chief Market Strategist

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