Who laughed last? Frost or the Shorts?
Apr 20, 2017 19:32:41 GMT
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Post by miamianne67 on Apr 20, 2017 19:32:41 GMT
FloridaTrend.com, the Website for Florida Business
Frost: A Cooling-Off Period
by Lisa Gibbs
Posted 10/1/1999
Updated 5 yearss ago
People used to say that no one ever made money shorting Phillip Frost -- in fact, this magazine said it when we put the boss of Ivax Corp. on our May 1992 cover. A dermatologist with a severe case of entrepreneurial itch, Frost is one of those CEOs to whom investors have accorded the status of can't-miss corporate phenom -- an investor's King Midas.
Oooh: See Frost turn around struggling Key Pharmaceuticals in the early '70s, then pocket $150 million on Key's sale to Schering-Plough in 1986. Aaah: See Frost build Ivax into a generic drug giant so loved by investors that its stock split 3-2 twice in 1991. Ohhh: See Frost make Forbes magazine's list of wealthiest Americans (1996 estimate: $490 million), as he begins putting his wealth behind other publicly traded ventures.
But, alas, in the past three years Frost's golden touch has lost its sheen, and during that time plenty of shorts have made their car payments betting against Frost companies. Consider:
-- At Ivax, a generic-drug price war and a couple of failed merger attempts contributed to massive losses in 1996 and 1997 and a stomach-churning drop in stock price. Two company presidents came and went, and Ivax's relationship with Wall Street deteriorated to such a degree the company stopped holding conference calls with analysts. Frost's net worth -- he's Ivax's largest shareholder -- suffered big.
-- Whitman Education Group, a Miami-based operator of 24 medical and technical schools, has seen its stock plummet in the last three years from $14.25 to $2.875 following lower-than-expected student enrollment, struggles to stay profitable and a class-action lawsuit alleging that some of Whitman's medical schools were "shams" providing substandard education. Frost is Whitman's chairman and largest shareholder.
-- Frost is vice chairman of vaccine-maker North American Vaccine, whose stock has gotten killed the last two years over higher production costs and competition in one of its key product lines. Frost holds 18% of the company.
-- Shares of Continucare, another Miami company Frost vice-chairs, have traded below $1 since March after peaking above $10 three years ago. Continucare, which provides a variety of outpatient health services and manages health clubs for Bally Total Fitness, lost $15 million in fiscal 1998 and $31 million three quarters into fiscal 1999. In June, it missed an interest payment on $45 million in debt. (Continucare Chairman and CEO Charles Fernandez sits on Ivax's board.)
-- Frost also was vice chairman of the new Pan Am airline, which filed Chapter 11 bankruptcy in early 1998 (Frost owned 880,000 shares, not including options).
The good news for Frost and his followers is that Ivax, Frost's flagship asset, has emerged from its darkest days and is in the midst of a full-fledged turnaround.
In the last three years, Ivax shed 4,400 employees and sold divisions unrelated to its core generics business. The company is focusing on areas where it has proven expertise, such as respiratory treatments, and it's leveraging its manufacturing capacity in Miami and Germany by entering the business of nutritional supplements and herbal medications. Ivax's last five quarters have been profitable, and analysts expect a generic version of the anti-cancer drug Taxol could boost revenues by as much as $200 million.
What's more, Frost seems to have found a company president he can work with. Neil Flanzraich, a lawyer with deep roots in the pharmaceutical business, joined Ivax's board of directors in 1997 and became president and vice chairman in May 1998.
Says Robert Wasserman, an analyst who follows Ivax for Southeast Research Partners, "Frost engineered Ivax's problems, but he did admit his mistakes and turn around the operation, so you have to give him credit for that." Although competitors like Andrx are doing a better job producing new generics and new technologies, Ivax is faring well in that area, too, hitting a lot of "singles and doubles," Wasserman says.
Even after five profitable quarters, not everyone's a believer: As of August, there were 2.54 million shares sold short. Some people still think there's money in shorting Phil Frost after all. Miamianne says: Final Chapter we Ivax longs were richly rewarded.
Frost: A Cooling-Off Period
by Lisa Gibbs
Posted 10/1/1999
Updated 5 yearss ago
People used to say that no one ever made money shorting Phillip Frost -- in fact, this magazine said it when we put the boss of Ivax Corp. on our May 1992 cover. A dermatologist with a severe case of entrepreneurial itch, Frost is one of those CEOs to whom investors have accorded the status of can't-miss corporate phenom -- an investor's King Midas.
Oooh: See Frost turn around struggling Key Pharmaceuticals in the early '70s, then pocket $150 million on Key's sale to Schering-Plough in 1986. Aaah: See Frost build Ivax into a generic drug giant so loved by investors that its stock split 3-2 twice in 1991. Ohhh: See Frost make Forbes magazine's list of wealthiest Americans (1996 estimate: $490 million), as he begins putting his wealth behind other publicly traded ventures.
But, alas, in the past three years Frost's golden touch has lost its sheen, and during that time plenty of shorts have made their car payments betting against Frost companies. Consider:
-- At Ivax, a generic-drug price war and a couple of failed merger attempts contributed to massive losses in 1996 and 1997 and a stomach-churning drop in stock price. Two company presidents came and went, and Ivax's relationship with Wall Street deteriorated to such a degree the company stopped holding conference calls with analysts. Frost's net worth -- he's Ivax's largest shareholder -- suffered big.
-- Whitman Education Group, a Miami-based operator of 24 medical and technical schools, has seen its stock plummet in the last three years from $14.25 to $2.875 following lower-than-expected student enrollment, struggles to stay profitable and a class-action lawsuit alleging that some of Whitman's medical schools were "shams" providing substandard education. Frost is Whitman's chairman and largest shareholder.
-- Frost is vice chairman of vaccine-maker North American Vaccine, whose stock has gotten killed the last two years over higher production costs and competition in one of its key product lines. Frost holds 18% of the company.
-- Shares of Continucare, another Miami company Frost vice-chairs, have traded below $1 since March after peaking above $10 three years ago. Continucare, which provides a variety of outpatient health services and manages health clubs for Bally Total Fitness, lost $15 million in fiscal 1998 and $31 million three quarters into fiscal 1999. In June, it missed an interest payment on $45 million in debt. (Continucare Chairman and CEO Charles Fernandez sits on Ivax's board.)
-- Frost also was vice chairman of the new Pan Am airline, which filed Chapter 11 bankruptcy in early 1998 (Frost owned 880,000 shares, not including options).
The good news for Frost and his followers is that Ivax, Frost's flagship asset, has emerged from its darkest days and is in the midst of a full-fledged turnaround.
In the last three years, Ivax shed 4,400 employees and sold divisions unrelated to its core generics business. The company is focusing on areas where it has proven expertise, such as respiratory treatments, and it's leveraging its manufacturing capacity in Miami and Germany by entering the business of nutritional supplements and herbal medications. Ivax's last five quarters have been profitable, and analysts expect a generic version of the anti-cancer drug Taxol could boost revenues by as much as $200 million.
What's more, Frost seems to have found a company president he can work with. Neil Flanzraich, a lawyer with deep roots in the pharmaceutical business, joined Ivax's board of directors in 1997 and became president and vice chairman in May 1998.
Says Robert Wasserman, an analyst who follows Ivax for Southeast Research Partners, "Frost engineered Ivax's problems, but he did admit his mistakes and turn around the operation, so you have to give him credit for that." Although competitors like Andrx are doing a better job producing new generics and new technologies, Ivax is faring well in that area, too, hitting a lot of "singles and doubles," Wasserman says.
Even after five profitable quarters, not everyone's a believer: As of August, there were 2.54 million shares sold short. Some people still think there's money in shorting Phil Frost after all. Miamianne says: Final Chapter we Ivax longs were richly rewarded.
Miami
