November 2019 Performance

November was a strong month with the market hit new highs. My portfolio just went along with for the ride. One interesting stock was Qiagen (Ticker: QGEN), which went from a dog performer to a rising star. As you may know, Qiagen pre-announced an earnings warning and CEO departure, which led to the stock hitting new lows. With the company in limbo, several acquirers approached the company with a potential deal. This in turn has propelled the stock to new highs. What a turnaround in stock price! I do think a deal will be announced shortly and I am looking for something in $50+ per share. Thermo (Ticker: TMO) will most likely win the prize.

I positioned my portfolio with a bearish tilt in 2019 with a hefty cash position, which I never got to deploy (yet). I am really surprised that my portfolio was able to generate these returns. I wish I can say it was skill, but luck is definite a factor. My special situations plays were limited to a few positions in the beginning of the year. Nothing else since… So no significant alpha contribution to the portfolio. 

We’ll see if I can end the year on a strong note…

2019 Performance = +36.05% with the running monthly returns as follows:

January +7.4%
February +3.7%
March +5.06%
April +7.15%
May -7.90%
June +8.2%
July +1.88%
August +1.00%
September -0.09%
October +1.12%
November +4.75%

October 2019 Performance

Surprisingly my portfolio held up relatively well in October with a gain of ~ 1.12% despite the earnings disappointments from Constellation Brands (Ticker: STZ) and Qiagen (Ticker: QGEN). Constellation Brands actually delivered a decent report, but the street did not like the growing losses with their stake in Canopy Growth (Ticker: CGC). And Qiagen warned of slower growth in China… I’ve held this one since it’s the IPO in 1996. I can’t seem to part with this one…

What saved me was Apple’s (Ticker: AAPL) earnings report. Still amazes me how this company can generate this type of numbers. I do constantly debate with myself as to whether to hold or sell the Apple position. The law of large numbers will eventually catch up to Apple and other mega cap tech companies.

I’m still looking around the special situations space. Spark Therapeutics (Ticker: ONCE) is starting to look interesting again. Looks like FTC will likely approve. Now just weighing the odds of an in depth UK investigation.

Oh of course I forgot to mention… I did not execute any trades in October.

2019 Performance = +29.88% with the running monthly returns as follows:

January +7.4%
February +3.7%
March +5.06%
April +7.15%
May -7.90%
June +8.2%
July +1.88%

August +1.00%

September -0.09%

October +1.12%

September 2019 Performance

Just like a broken record… Another dull and boring month. I ended September flat with a slight loss of 0.09%. No trades were generated this month as I saw no compelling opportunities. It’s times like these where my patience is tested.

The big news for me will be Constellation Brands (Ticker: STZ) earnings report this Thursday. It should be a decent report as their beer biz continues to perform well. They should be initiating their plan of returning cash to their shareholders via stock buyback and dividend increases.  

No compelling risk arb plays right now. I think Spark Therapeutics (Ticker: ONCE) taught me a lesson where there are no safe plays out there anymore. I’m just glad that I was able to get out the position early on.

So, we now enter the home stretch with the final quarter of the year…

2019 Performance = +28.45% with the running monthly returns as follows:

January +7.4%
February +3.7%
March +5.06%
April +7.15%
May -7.90%
June +8.2%
July +1.88%

August +1.00%

September -0.09%

August 2019 Performance

Yup, you guessed it, I didn’t do a thing in August. Surprisingly I was able to eke out a gain in the face of this volatility. This has been the most challenging market for me in terms of finding new ideas to put money in. It’s a bit frustrating, but just have to wait it out. I am starting to do some research on foreign stocks to try to find some good values.

Looking back… It’s interesting to see how my investing style has evolved. I started off as an aggressive growth investor and just went with high flying momentum stocks. From momentum investing, I transitioned to special situation plays. I really enjoy the special situation plays as there is usually an end game where you can make some nice $$$ if you’re right or it can just blow up in your face. Now, I am more focused on dividend paying stocks as I start to appreciate the compounding effect of dividend reinvestment. I’ve learned to be flexible with my investment style as market conditions change.

Ok, enough of my rambling…

2019 Performance = +28.56% with the running monthly returns as follows:

January +7.4%
February +3.7%
March +5.06%
April +7.15%
May -7.90%
June +8.2%
July +1.88%

August +1.00%

July 2019 Performance

Really didn’t do a thing in July as I saw no compelling opportunities. Just continued to ride my long positions and managed to squeak out a small gain. I continue to sit tight with some cash on the sidelines. In the past, I have been aggressive in the merger arb space, but I am treading more cautiously now. I’ve been in a risk off mode for a while. I know it’s boring not executing any trades. Just waiting for a good risk / reward opportunity to eventually show up.

Current portfolio weighting:

Apple 17.9%
Alibaba 4.4%
Mastercard 7.7%
Qiagen 4.9%
Sanofi 1.5%
Constellation Brands 22.6%
Visa 24.8%
Cash 16%

2019 Performance = +27.28% with the running monthly returns as follows:

January +7.4%
February +3.7%
March +5.06%
April +7.15%
May -7.90%
June +8.2%
July +1.88%

June 2019 Performance

June was a month where calmer heads prevailed with the resolution of the Mexico tariff threat. This obviously affected Constellation Brands, which manufactures most of their beer in Mexico. Also, the earnings report helped to alleviate fears in the slow down of their beer biz. I continue to maintain a ~ 20% + position in Constellation Brands and have no reason to sell anytime soon. This company is benefiting from the mega trend in the beer biz as the old legacy brands from Coors and Bud continue their decline. Everything from what I can see points to continue growth in the Mexican beer biz. Finally, I’ll be interesting to see how their stake in Canopy growth plays out with the introduction of marijuana edibles such as beverages coming this December for the Canadian market.

Surprisingly, all my other long holdings (Apple, Alibaba, Mastercard, Qiagen, Sanofi and Visa) generated positive gains in June. I continue to maintain a very conservative tilt by holding some cash. It’s not bad with cash yielding ~ 2% in this environment. Much better than the near 0% in the previous years.

In terms of risk arb plays, I did play around with Red Hat via Short Puts. I’ve recently closed out my position with a small gain. I went in big and just didn’t feel comfortable with such risk. So, I’m back to no arb / special situation positions.

Maintaining the status quo…

2019 Performance = +24.94% with the running monthly returns as follows:

January +7.4%
February +3.7%
March +5.06%
April +7.15%
May -7.90%

June +8.2%

Red Hat Arb Play

I’m finally back in the merger arb game. Today, I initiated a position in Red Hat (Ticker: RHT) via Short Puts. It looks like all the regulatory approvals have been received and IBM (Ticker: IBM) has the cash to close this deal. So what’s left?