It's like clockwork. You can almost set your watch by it: Big pharma announces an acquisition of a little biotech for a substantial premium and moments later someone complains on the message board.
That's right, complains ... about the value of their portfolio going up! Some of the reasons are somewhat understandable, but others, most even, are just nonsense.
So much potential
This seems to be the most common complaint. Investors buy into a biotech company hoping for a 10-bagger after a drug is approved. Instead, they end up getting capped at a double when the biotech gets acquired.
I see the argument. If Dendreon's
But no one knew for certain that its prostate cancer treatment Provenge would pass its phase 3 trial. In fact, a lot of people thought it wouldn't work -- that's why it was trading so low. Getting double what most investors felt the stock was worth the day before shouldn't be discounted, even if it is disappointing.
All that work for naught
This one actually makes a little sense. You spent a long time figuring out that Medarex's
The simple solution is to remember that investing is supposed to be fun. The thrill of the hunt should excite you. If it doesn't, consider sticking your money in an ETF or index fund and enjoy doing something else. I hear gardening is nice this time of year.
Whether you like potential one-drug wonders or companies like Exelixis
Benefits management the most
It's often true that the value of automatically vesting stock options trumps the equity of individual investors. But you kind of knew that going in didn't you? Management has to be rewarded somehow for their work. Assuming the price is right, itβs a win-win -- even if management's win is bigger.
Selling for a loss
It can be disappointing for long-term shareholders to see their company taken out for a premium that's below the original purchase price. Johnson & Johnson
It happened to the Motley Fool's Rule Breakers newsletter as well; Gilead Sciences
But remember, except for tax planning, you should avoid making decisions based on your cost basis. When deciding whether to sell or hold, the question should be whether the stock has potential to increase in value. Your original purchase price is fairly irrelevant, as circumstances were different back then.
Still haven't convinced you to stop whining?
Go buy some Johnson & Johnson. The company has survived over 100 years without being taken out. Short of Buffett, Icahn, and Gates getting together to buy this American icon, I think you'll be safe from a takeover.