Goodbye Walgreens My Old Friend

​

Hello Walgreens my old friend

I’ve come to get my meds again

Because your stock price keeps me weeping

Cash flow bleeds while I was sleeping

And your performance that was planted in my brain

Still remains

Within the sounds of silence

In restless dreams I walked alone
Narrow streets of cobblestone
‘Neath the halo of a street lamp
I turned my collar to the cold and damp
When my eyes were stabbed by the flash of a neon light
That split the night
And touched the sound of silence

But in the online world I saw

Ten thousand owners, maybe more

Owners talking without speaking

Traders selling without listening

All typing comments that voices never share

Walgreens despair

Disturb the sound of silence

“Fools” said I, “You do not know
This chart like a cancer grows
Don’t buy it at fifty smackers
Or live on water and crackers
Buy under 10 where WBA fell
And echoed in trader silence

Then investors bowed and prayed

To Wall Street gods they made

The ticker flashed out its warning
The news headline was forming

“Walgreens sold for $11.45”

Are written on the losers’ files
And pharmacy aisles
And whispered in the sounds of silence”

Do I pick up my prescriptions at Walgreens? yes

Do I go there for vaccinations? yes

Have I bought last minute Halloween candy there? yes along with a mask

Does my Walgreens offer a good selection of Chia Pets? yes

Have I stolen merchandise from my local Walgreens? no some may call me a nonconformist

Typically, I do not buy many individual large cap stocks. But, I was familiar with Walgreens. Before the world changed, this company used to deliver consistent revenue and cash flow which funded it’s stable dividend. Covid vaccine delivery was a boon to the top and bottom lines. However, afterwards the wheels fell off the bus. In fact, in 2024 it was the worst performing stock in the S&P 500, down over sixty percent. Less than ten years earlier, Walgreens was trading at roughly $100 stock and selling at 22x earnings as well as free cash flow.

The big three players in retail drug pharmacy are Walmart, Walgreens, and CVS. Our population continues to age and consumers always need drugs. Even though Amazon acquired Pill Pak in 2019, older people like me prefer to go to see the pharmacist versus having my prescription delivered at my doorstep. And Walgreens maintained its 20%ish share of prescriptions. So, when Tim Wentworth agreed to take the CEO job, I bought a wee bit of stock at around $20 per share.

My buy thesis was pretty simple. Sell off the unwise acquisitions made by the prior CEO, pay down debt, and begin fixing the stores. Needless to say, I should of waited. I stuck my toe in the water again in the teens, and almost almost lost it. In fact, it wasn’t until WBA morphed into a single digit midget that I did a lot more research on the name, and ultimately bought a lot more stock. Why am I writing this little note? Because when the behemoth of prescriptions crashed under $10, it entered pawnshop territory. Although, I made money, I should have done all the investment research before my first and second purchases!!

Thank you Sycamore Partners for paying $23.7 billion in a leveraged buyout for WBA. The deal is supposed to close by year end. Goldman Sachs, JP Morgan, and Citigroup are leading a syndicate of banks to underwrite $18 billion in debt. It seems as all systems are go. For me, I’m using three outcomes. The deal closes at $11.45 by year end. An investor receives the buyout price plus $3 dollars in proceeds from sales of unwanted divisions. Or the deal collapses and the stock sinks back to $8. Using equal probabilities, gets me to roughly $11.30. That’s roughly a three percent gain for waiting until year end. In the words of Andrea Bocelli: Time To Say Goodbye

NEWSLETTER DISCLAIMER

The Stock Pawnshop newsletter (“Newsletter”) should not be construed as investment advice. The Newsletter is for entertainment purposes only. Antimony Isle, LLC, its owners or affiliates, do not make any representations or warranties, express or implied, about the Newsletter’s accuracy, completeness, or correctness. The information in the Newsletter may become outdated and there is no obligation to update any such information. The information contained in the Newsletter is not intended to constitute legal, accounting or tax advice or individually-tailored investment advice and is not designed to meet your personal financial situation. The investments discussed in the Newsletter may not be suitable for you. This Newsletter should not be construed as a solicitation to act as securities broker or dealer. Antimony Isle, LLC and its owners and affiliates may hold or acquire securities covered in this Newsletter and may purchase or sell such securities at any time, including security positions that are inconsistent or contrary to positions mentioned in this Newsletter, without notice.