How we ended up with not buying AmerisourceBergen ($ABC)


amerisourcebergen_416x416.jpgIn the past few weeks we researched some companies which we had an eye on. We really liked the potential of the healthcare businesses, so we checked out some drug distribution companies. Back then, we were still indecisive on $ABC or $CAH. And from reading the comments, it’s a different call depending on your strategy or preferences.

So last week we decided to buy $ABC. Because we have to apply for permission to trade, we decided to take action last friday. And just a few moments before hitting the buy button, we saw that the stock prices of drug companies just fell down with 10, 15 or 20% even. What. is. going. on?

In the end we didn’t buy the stock. This is what happened.


We were a little surprised when this roller-coaster of prices decided to go down exactly at the same time when we wanted to buy $ABC. We did some research earlier on the company and liked their business and financial metrics. So what has changed? 

Because of the volatility in the healthcare markets, we decided to check on drug distribution companies, thinking there would be less effected by changes in drug prices. Well, guess again…

The revenue is directly affected by a change in drug prices due to contractual agreements with their suppliers. Because of this, their margin of profit is directly correlated to the profit of their supplier. And they go up and down with the rest of the market. And in this case, they went down big time. 

AmerisourceBergen Corp went down with a astonishing -13%, and their competitors Cardinal Health Inc. and McKesson also plummeted.

We still like the business of $ABC and their position in the market. An yes, although this recent turmoil can cause some volatility in the short run. We think the long term growth is still there. And their growth is just really impressive, as well in revenue as in dividends. 

We simply don’t know what the market will bring in the future, and we base our decisions on the facts we know today. And fact was that the massive drop in prices provided a somehow unique opportunity for us to buy the stock for a much lower price. 

There was 1 thing we overlooked checking. Something that ultimately let us to not buying the stock. And it was one of the most silly reasons why.

It’s not that we didn’t want to buy it, we just couldn’t. Literally…

The brokerage we use for our transactions is a bank, which only let us buy certain foreign stocks. And unfortunately for us, Amerisourcebergen was not one of them. And neither were their competitors Cardinal Health or McKesson Corp.

This is the second time we couldn’t buy a stock because it was not available with our brokerage. A lot of REIT’s are also not included. 

So, we ended it with buying nothing. No new company to add to our portfolio. And no dividends to look forward to. We will keep looking for other stocks. Which we CAN buy. And should probably think about changing our broker somewhere in the near future.

Is there anyone experienced something similar? Or did you end up not buying something for another reason?  If any of you have any tips for a good brokerage, and available in the Netherlands. We are open for suggestions  🙂  

2 thoughts on “How we ended up with not buying AmerisourceBergen ($ABC)

  1. That stinks that you weren’t able to buy ABC on the cheap. I didn’t realize that you had restrictions like that. That’s really unfortunate. If I come across any good companies I will be happy to pass them along 🙂

    Like

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