Matt Gravitt
Long/short equity, value, special situations, momentum

A Vivus Buyout? Fat Chance And A Good Time To Short

If you are looking for a textbook example of how to completely mismanage expectations, look no further than the obesity drug sector and VIVUS, Inc. (NASDAQ:VVUS). After suffering a rejection by the FDA, VVUS clawed its way back and got approval for its prescription obesity drug (now marketed as Qysmia) and in conjunction saw its share price triple in the first 7 months of 2012.

A couple years and countless bagholders later, VVUS finds its stock price at its lowest levels since 2009 and the future isn't any brighter based on its current trajectory. It is for that reason (among others) that the recent developments about a potential buyout should be taken with a huge grain of salt.

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