Sold Venoco and Back in Motorola Mobility

I sold my holding in Venoco, Inc (Ticker: VQ) today at $11.01 and just broke even on this trade. Even though this was just a small position, there was just too much risk. I just don’t have a fuzzy feeling when there is no committed financing in place. As they say: "show me the money…"

I’m back in Motorola Mobility Holdings, Inc (Ticker: MMI) at $39.68. We should hear by March 20th regarding China’s decision (MOFCOM) on this merger. I’m factoring in a closing date of March 23rd for this deal, which will equate to an annualized return of ~32% (0.80% net gain).

Medco Health Solutions Getting Closed Out

It looks like my Medco Health Solutions, Inc. (Ticker: MHS) trade is going to get closed out this week at options expiration. When I opened the position in Medco Health Solutions, I also sold the March 70 calls for $0.95 against my position. I’ll be making a decent return of 3.3% or ~ 108% annualized (including the proceeds from the covered calls) with this trade. Again I went “All In” with this trade.

Initiated a Position in Venoco and Medco Health Solutions

Here’s an update on my merger arb positions:

I initiated a small position in Venoco, Inc. (Ticker: VQ) at $11.00. This is a management buyout play in which the CEO is offering $12.50 per share in cash for the company. The big warning bell about this deal is that there was no committed financing when the deal was struck. I do believe the CEO will find financing for this buyout considering where the price of oil is currently trading. This one is risky so I would not put on a big position even though the potential return is very attractive.

I sold my position in Motorola Mobility Holdings, Inc (Ticker: MMI) at $39.71 generating a whopping 0.01%. I used the proceeds to aggressively add to a new position in Medco Health Solutions, Inc. (Ticker: MHS) on Friday with prices ranging from $68.56 to $68.68. This deal is looking like it will get the go ahead from the FTC. MedcoHealth shareholders will receive $28.80 in cash and 0.81 shares in Express Scripts, Inc. (Ticker: ESRX) if the deal goes through.

Some Motorola Mobility

I picked up some Motorola Mobility Holding, Inc (Ticker: MMI) yesterday at ~ $39.68. It’s looking like an ok arb play with a potential annualized return of 11.50 to 16% depending on the closing date. I’m looking at a potential closing by March 23rd. The only remaining piece is approval by MOFCOM, which could happen at anytime with a deadline of March 20th. All of the other countries with antitrust reviews have given their ok on the acquisition of Motorola Mobility by Google (Ticker: GOOG).

American Realty Capital Trust Inc

It’s been really boring without any good M&A plays out there. This morning as I was reading the Wall Street Journal, I noticed a tombstone ad detailing the tender offer for American Realty Capital Trust Inc (Ticker: ARCT). The company is conducting a tender offer to purchase shares from a minimum price of $10.50 to a maximum price of $11.00. It looks like odd lot shares will take priority. I picked up 99 shares at $10.02 this morning and looking to make a few extra $ for lunch money.

Right now, I just have tiny positions in Illumina (Ticker: ILMN) and Jaguar Mining (Ticker: JAG). I’m not looking to go big in any way with these positions. Illumina is being stalked by Roche and Jaguar Mining is going through a strategic alternative review. Just make a few $ if it works out…

Tendered Inhibitex

I tendered my Inhibitex (Ticker: INHX) shares today. I’m going sit back and wait for the cash. I don’t see any compelling risk arb opportunities right now. I’ve pretty much made my year with the Pharmasset and Inhibitex plays. I went “all in” in both deals as I saw the risk reward to be very favorable. Inhibitex was truly a gift…

More Inhibitex

I sold my remaining holding in Pharmasset, Inc. (Ticker: VRUS) today and used a portion of the proceeds to pick up more shares in Inhibitex, Inc. (Ticker: INHX) at ~ $24 per share.

It’s been a wild ride in 2011 as I got hit quite badly with the special situation plays in Big Lots (Ticker: BIG) and Gen-Probe (Ticker: GPRO). I went in pretty big in those positions and got killed when there were no deals. That was definitely an unpleasant learning experience… I placed a too big of a wager on an uncertain situation. Fortunately, I managed to dig myself out of the hole and basically ended flat for the year. It would have been a great year if it wasn’t for those two big losers. Going over my trades, ~ 71% were profitable. I would like to maintain this goal going forward. You are never going to be 100% profitable on your trades. The end game is simply to make money.