Biovail - The Third Option

Not too long ago I bought stock in Biovail. I now know that I made a mistake. Pharmaceuticals is not a business I understand well which led me to a poor analysis. Price has been sliding downward, driven in part by the weak revenue pipeline and the recent, and ongoing, proxy battle between management and Eugene Melnyk.

The proxy battle has heavily damaged the stock. I believe this is in part by creating new doubts about prospects for new, successful products and uncertainty about what the company will become and how it will be managed. In my view both current management and Melnyk are coming out of this looking weak. One thing I've learned in business is that execution is key, and a capable management team enables that. A strong team with an iffy idea is better than a weak team with a good idea.

It was a very entertaining few weeks leading up to last week's shareholders meeting, with the guy from Purolator stopping by every couple of days with a new missive from management or Melnyk. Entertaining, yes, but very worrisome. It is very difficult for someone far out in left field to read, understand and assess the technology, market assessment and management competency of the competing strategies. Disgust is what I finally felt. I did vote my shares for management if only because I have less confidence in Melnyk's team. Was I right? Damned if I know.

While I did pick one of the two options presented to me, it is now time to also choose the third option that neither side mentioned. I will sell my shares, undoubtedly at a loss, when the price looks to reach a short-term high. This may happen in July after the parties meet in court next week. They can continue their battle without my skin in the game.