Friday, July 24, 2015

Closed Out Hospira / Portfolio Update

I closed out my short Put positions in Hospira (Ticker: HSP) this week. I generated a decent gain and decided it was a good time to reduce my risk a bit. This was an unhedged (naked) position so if there are any hiccups with the US or EU antitrust regulators, I would be in a little bind. On the other hand, I continued to build a short Put position in Receptos (Ticker: RCPT) and I believe this deal will close rather quickly without any antitrust issues.

I haven’t done this for a while, but here is an overall snap shot of my current non retirement portfolio holdings and the percentage weighting:

Thursday, July 02, 2015

June 2015 Performance

June was certainly a challenging month with the macro events affecting the markets. It was a quiet time for me as I just basically held onto many of the pre-deal plays that were entered in the previous months. I’m still in the following merger arb positions: Altera (Ticker: ALTR), Omnicare (Ticker: OCR), Pall (Ticker: PLL) and Hospira (Ticker: HSP) via short Puts. I anticipate the Hospira deal to close next month.

I initiated a small position (~3%) position in Capitol Acquisition Corp II (Ticker: CLAC). This is basically a blank check company that is in the process of acquiring Lindblad Expeditions. Lindblad Expeditions is a small cruise line that has partnered with National Geographic’s in providing a high end / adventure cruise experience. I’ve always been intrigued with the cruise business and really like the attractive valuation of this deal. This acquisition should close next week pending shareholder approval.   

I’m playing a bit of defensive right now and just waiting patiently for good opportunities to show up.

2015 Performance Year to Date = +15.52% with the running monthly returns as follows:

January +3.4%
February +7.03%
March -0.33%
April +0.39%
May +5.59%
June -1.2%

Friday, May 29, 2015

May 2015 Performance

I've been fairly busy as you can see that my postings have diminished to once a month. Hopefully, I can get back into the zone and start posting more often.

So despite the market volatility, things turned out ok for the month. May was a merger mania month and I did jump on a few deals, which contributed positively to my monthly performance. I picked up some Omnicare (Ticker: OCR) (~10% position) and Pall (Ticker: PLL) (~ 13% position) as pre-deal plays, which fortunately worked out. I’m still playing Hospira (Ticker: HSP) via short Puts, in which this deal should close in ~ 3 months as the regulatory approvals start rolling in (I still can’t see why Pfizer (Ticker: PFE) received a Second Request from the FTC).

I also pick up some Altera (Ticker: ALTR) (~ 5% position) today as a deal may finally happen. I have to admit, I’ve been eyeing Altera for a while and am a bit late to the game. So we’ll see what happens next week with Altera and Intel (Ticker: INTC).

I’m still holding tight to my long term positions in Apple (Ticker: AAPL), Visa (Ticker: V), MasterCard (Ticker: MA), Qiagen (Ticker: QGEN), Constellation Brands (Ticker: STZ) and Vertex Pharmaceuticals (Ticker: VRTX). As they say, it’s the sitting that makes you the money.

2015 Performance Year to Date = +16.92% with the running monthly returns as follows:

January +3.4%
February +7.03%
March -0.33%
April +0.39%
May +5.59%

Saturday, May 02, 2015

April 2015 Performance

There was nothing eye opening to report in terms of performance for April. It was a blah, blah month… I did manage to squeeze out a small gain of 0.39% for the month. I’m trying not to force myself into any trades unless I see a good risk / reward opportunity. In this game, you really have to minimize any potential losses and not do anything stupid, which I sometimes (I mean many times) DO!?!

Ok, here's a briefing for April...

Constellation Brands (Ticker: STZ) reported nice earnings and I continue to hold on tight to this position. I’ve been in this position for ~ 2 years and continue to be my largest position. They are executing very well and will see much better margins once their manufacturing expansion in their beer biz is complete. The company will be initiating their first dividend starting this month, which was a bit sooner than I expected. This company is a really nice cash flow generator and I can easily see them raising the dividend and initiating a stock buyback in the future.

I did execute a few trades...

I took some small profits in Habit Restaurant (Ticker: HABT). I really like the Habit concept and believe they will be successful outside of their base in California. I sold based on valuation, it’s something you need to respect. Habit is currently trading at over 100 times earnings and growing at most around 40%. As they say, it’s priced for perfection and nothing stays perfect forever.

I’ve been continuing to build up my short Put position in Hospira (Ticker: HSP). I’m looking for this deal to close by August. It’s all about the antitrust approvals in getting this deal done. Recently, Pfizer (Ticker: PFE) pulled and refiled their filing with the antitrust regulators, which is actually a positive. This indicates that Pfizer could be close to some type of resolution with the regulators. I really like this risk / reward opportunity.

I just initiated a position in Omnicare (Ticker: OCR) as a pre deal play. I believe the odds of a deal occurring is high so we’ll probably hear something this month.

That’s pretty much sums things up for April…

2015 Performance Year to Date = +10.73% with the running monthly returns as follows:

January +3.4%
February +7.03%
March -0.33%
April +0.39%

Wednesday, April 01, 2015

March 2015 Performance

It’s been a challenging month with the market volatility. Overall my portfolio held up relatively well with a loss of 0.33% for the month.

So what worked and didn’t work? I took a stab at a pre deal play with LifeTime Fitness (Ticker: LTM). The Wall Street Journal was all over LifeTime Fitness and I liked the odds of a deal occurring. I continued to play Salix Pharmaceuticals (Ticker: SLXP) via short Puts and this deal just closed today. Finally, I did some bottom fishing with Veeva Systems (Ticker: VEEV) by catching a falling knife and managed to have all of my fingers still intact.

And now what didn’t work… Vertex Pharmaceuticals (Ticker: VRTX) slumped a bit on so so results from their clinical trial for Cystic Fibrosis. Gilead Sciences (Ticker: GILD) also continued to decline on concerns of continued competition for their Hepatitis C drug.

I’m fairy cautious right now and have actually raised some cash. Still searching for some good special situations / arb plays.

2015 Performance Year to Date = +10.30% with the running monthly returns as follows:

January +3.4%
February +7.03%
March -0.33%

Saturday, February 28, 2015

February 2015 Performance

February turned out to be another strong month. I was able to generate a net gain of 7.03%, which I certainly was not expecting. The majority of this gain was attributed to my holdings in Apple (Ticker: AAPL), VISA (Ticker: V), MasterCard (Ticker: MA), Constellation Brands (Ticker: STZ) and even Qiagen (Ticker: QGEN). These are my long term holdings, which I pretty much leave alone.

I have entered into a short Put position in Salix Pharmaceutical (Ticker: SLXP) and Valeant (Ticker: VRX) with the expectation that Valeant completes the acquisition of Salix shortly. I really like Valeant (with Michael Pearson as one of the best CEO's around) and entered a short Put with a shot at getting some shares at an attractive price. Other than that my only other merger arb / special situation positions are a short Put in Hospira (Ticker: HSP) and the Casa Ley CVRs. I’ll probably add to the Hospira position, but I want to get a good feel on the regulatory review before making my move.

I usually don’t go for the high flyers, but I did initiate a position in Habit Restaurant (Ticker: HABT). I just see a huge run way for this company to expand throughout the country. I’m looking at holding Habit for many years. As they say, time will tell…

2015 Performance Year to Date = +10.43% with the running monthly returns as follows:

January +3.4%
February +7.03%

Thursday, February 26, 2015

Sold Boston Beer

Investing is all about being objective and not letting your emotions take control of the situation. Yesterday, I sold a small position in Boston Beer (Ticker: SAM) in my retirement account because of its revenue short fall. Even though I still generated a small gain of ~ 13%, the paper gain was obviously much higher at one point. I enjoy their product (Angry Orchard) and was planning to hold for a while, but fundamentally it was a really bad quarter and they had to guide down for 2015. I listened in on the earnings call and I didn’t like what I heard as the company was facing more competition, decreasing market share (Angry Orchard), slowing growth, higher transportation costs, etc… Also this stock was selling at a high valuation. This was in contrast to Constellation Brands (Ticker: STZ), which was and is firing on all cylinders with its beer biz. Constellation Brands has had a great run and continues to be my largest holding.