Friday, November 28, 2014

November Performance

November was one of those months where everything worked out, which makes me a bit nervous. Apple (Ticker: Apple), Constellation Brands (Ticker: STZ), Visa (Ticker: V) and Vertex Pharmaceuticals (Ticker: VRTX) all made a positive contribution to the November performance. In addition, Scientific Games closed on its acquisition of Bally Technologies in November, which also helped a bit. I continue to aggressively play the merger arb game as the spreads on many deals continue to look attractive.

Moving into December, I am involved in the following special situation plays: (1) Multimedia Games&nbsp (Ticker: MGAM); – long common and short Puts, (2) Safeway (Ticker: SWY – short Puts, (3) Lorillard (Ticker: LO) – long common and (4) Prosena (Ticker: RNA)– short Puts. I anticipate Multimedia Games and Safeway to close in December. Prosena should close early next year and Lorillard hopefully closes by the middle of next year. Currently doing some work on Baker Hughes as this is starting to look interesting with the recent collapse in the oil prices.

That’s it for now…

Performance Year to Date = +29.50% with the running monthly returns as follows:

January -0.67%
February +6.50%
March -2.69%
April -1.51%
May +7.30%
June +2.59%
July -1.46%
August +4.57%
September +2.02%
October +5.12%
November +7.73%

Saturday, November 01, 2014

October Performance

October was certainly a wild month and I didn’t expect the market to take off like this at month end. This month turned out well as several of my large holdings contributed positively to my performance. VISA (Ticker: V), MasterCard (Ticker: MA), Apple (Ticker: AAPL) and Constellation Brands (Ticker: STZ) moved up nicely on positive earnings. I also made a little bit in trading some merger arb plays such as Covidien (Ticker: COV), Multi Media Games (Ticker: MGAM) and Montage Technology (Ticker: MONT). The merger arb plays I am playing right now are Safeway (Ticker: SWY) (sold Puts), Lorillard (Ticker: LO) (long common) and Bally Technologies (Ticker: BYI) (long common).

This has been a difficult year to generate positive returns. I’ve had several merger arb / special situation plays that didn’t work out, but fortunately the damage was not severe as I positioned these holdings to a smaller position as compared to the previous years where I would have gone in big. I’ve learned my lesson where one or two blowups can ruin your year.

Performance Year to Date = +21.77% with the running monthly returns as follows:

January -0.67%
February +6.50%
March -2.69%
April -1.51%
May +7.30%
June +2.59%
July -1.46%
August +4.57%
September +2.02%
October + 5.12%

Monday, October 13, 2014

Sold Shutter Fly and TRW Automotive

I made some adjustments to my special situations / arb plays today. I sold off my position in Shutter Fly (Ticker: SFLY) generating a loss of 15.20% and TRW Automotive (Ticker: TRW) generating a loss of 2.55%. I certainly did not expect the news from Shutter Fly in which the private equity firm Silver Lake pulled its bid for the company at the last minute. It’s not easy to sell for a loss, but sometimes it’s best to step away and re-evaluate the situation. I also sold TRW Automotive because the risk reward at this point was not ideal as there are better opportunities out there. What better opportunities? I started to build a position in Bally Technologies (Ticker: BYI) at an average price of $79.80 (potential annualized return of 19.73% assuming a closing by December 31st) as the company anticipates the completion of this deal by year end at a takeout price of $83.30.

Wednesday, October 01, 2014

September Performance

September turned out to be ok considering the market volatility. My positive performance can be attributed to the gains in the following positions: Intermune (Ticker: ITMN), Veterx Pharmaceuticals (Ticker: VRTX) and Apple (Ticker: AAPL). It’s been a very challenging year unlike last year where just about anything you touched made money.

I still have a few arb / special situation plays: Safeway (Ticker: SWY), Montage Technology (Ticker: MONT), Lorillard (Ticker: LO), TRW Automotive (Ticker: TRW) and Shutter Fly (Ticker: SFLY). We’ll see how those play out…

Other than that, not much going on… I’ll be keeping a close eye on Constellation Brands (Ticker: STZ) earnings report tomorrow. I still believe there are more catalysts (i.e. completing the build out of the manufacturing plant, debt reduction, returning cash to shareholders, etc…) to move this one higher. I still plan to hold this one for a while.

Performance Year to Date = +16.65% with the running monthly returns as follows:

January -0.67%
February +6.50%
March -2.69%
April -1.51%
May +7.30%
June +2.59%
July -1.46%
August +4.57%
September +2.02%

Monday, September 29, 2014

Intermune = Done Deal

Roche (Ticker: RHHBY) completed its acquisition of Intermune (Ticker: ITMN) today. I’ll have to wait until the October options expiration to close out the position. I sold the January 2016 $70 Puts at an average price of $0.65. I generally like to write Puts on these tender offer plays as it offer a relatively quick closing with minimal risk. Writing Puts can be risky so that’s why I’ll only enter these positions after an announced merger agreement. It’s all about the odds… just like poker.

Tuesday, September 23, 2014

Intermune - Almost Done

Roche’s (Ticker: RHHBY) acquisition of Intermune (Ticker: ITMN) is pretty much a done deal now. The company received all of the required regulatory approvals as of yesterday as we head toward to expiration of the tender offer on September 26th.  I’ll most likely hang on and let the options expire in October unless I see something more compelling to free up some buying power.

Wednesday, September 03, 2014

Intermune Regulatory Approvals

It looks like Roche’s (Ticker: RHHBY) acquisition of Intermune (Ticker: ITMN) has a good chance of being completed by the end of this month if all the regulatory approvals are received. The company has to obtain approvals from three countries. The required approvals and decisions are as follows: US HSR 09/17, Australia 09/22 and Germany 09/25. This tender expires on 09/26, the day after the receipt of the last regulatory approval. The spread is not wide enough to play via common so I’ve been selling the January 2016 $70 Puts.