June 2017 Performance

I can’t believe we’ve already reached the half way point of the year… I just squeaked out a gain of +1.34% for June with help from Constellation Brands (Ticker: STZ), which announced strong results this past week with the stock hitting new highs. It’s been an amazing run for Constellation Brands as the company was the prime beneficiary in Anheuser-Busch InBev’s (Ticker: BUD) acquisition of Grupo Modelo back in 2013. I believe there’s still plenty of upside remaining in the stock as their Mexican beer portfolio: Corona, Modelo Especial (my favorite!) and Pacifico are continuing to gain strong momentum. This is a keeper for the foreseeable future.

June was definitely a quiet month for me as I did not execute any trades. Just sat around waiting for a good risk / reward merger arb opportunity.

Now looking back at the past 6 months, I guess the trade that stands out the most was the blowup in Rite Aid (Ticker: RAD) back in January. That trade really made me focus on risk management. So in a way, I’m glad that I was able to experience this loss in the beginning of the year and really build from the experience.

Here’s a snap shot of my current portfolio:

That’s about it for now…   

2017 Performance Year to Date = +23.54% with the running monthly returns as follows:

January -4.50%
February +10.18%
March +5.1%
April +4.34%
May +5.67%

June +1.34%

May 2017 Performance

May was another replay of the March / April performance. The bulk of this performance can be attributed to my positions in Constellation Brands (Ticker: STZ) and Apple (Ticker: AAPL). Both Constellation Brands and Apple were fairly stagnant in 2016, but they have finally awaken in 2017. The closing of Syngenta (Ticker: SYT) was also a positive contributor to the results.

Right now things are very quiet with no positions in any arbitrage / special situation plays. I’m just patiently waiting for the next opportunity to pop up. I do have a healthy cash position (~13%), which is rare for me. I’m usually 100% + invested at most times, but there are instances where cash just builds up as there is nothing compelling to buy.

Hopefully a decent merger arbitrage / special situations play(s) will present itself in the second half of the year. Just playing things conservatively for now...

2017 Performance Year to Date = +21.93% with the running monthly returns as follows:

January -4.50%
February +10.18%
March +5.1%
April +4.34%
May +5.67%

Sold IvenSense

I sold my position in IvenSense (Ticker: INVN) today at $12.95 generating a net gain of ~ 0.90% over a 6 day period (~54% annualized return). I’m not going be greedy and try to capture the last $0.05. It was a nice quick gain and time to move on…

Bought InvenSense

I picked up some InvenSense (Ticker: INVN) at an average price of $12.84 (~21% position). The stock sold off a bit after there was news of the company losing half of their motion sensors for the iPhone to Bosch. The company is being acquired by TDK Corporation for $13 per share in cash. I do not see this affecting the merger as losing some business to a competitor does not constitute a material adverse event. TDK is buying the company for future applications (i.e. virtual reality, automotive, drones, etc...) in addition the iPhone biz. The shareholder vote is scheduled for 05/17 and the company plans to delist the following day, 05/18. If all goes to plan, I can see the cash hitting the account on 05/19, which would translate to a net gain of 1.24% (~29% annualized return).

Sold VWR International

I decided to take a small gain in VWR International (Ticker: VWR). I sold at $34.09 generating a net gain of ~1.1%. I just don’t know if the takeout price can reach the $5 billion mark. The WSJ was simply making an assumption with the $5 billion price tag based on the expected premium one would expect in a buyout. I was not comfortable with this fuzzy math…

Some VWR International

I took a stab at VWR International (Ticker: VWR) today by taking a ~ 8% position with an average price of $33.70. WSJ reported that New Mountain Capital is in talks to acquire the company for ~ $5 billion, which works out to a price in the high 30’s (~ $38 per share based on the assumption of 132 million diluted shares outstanding). I can see other companies interested in VWR as there is a scarcity value in these types of companies that supply reagents / instrumentation to the life science industry.

April 2017 Performance

April was almost a replay of March in which many of the holdings contributed to the positive performance of +4.34%. I will start off with the negatives, which can be summed up with my position in Time Inc (Ticker: TIME). I took a ~5% loss on the position (~6% holding), which in hindsight was the correct move. Last week Time Inc. decided not to sell itself resulting in a ~17% decline. It’s never easy to take a loss, but it’s just part of this game…

Now onto the positives… Many of my large long positions: Apple (Ticker: AAPL), VISA (Ticker: V) and Constellation Brands (Ticker: STZ) performed well. Constellation Brands reported good numbers and an boosted its dividend payout resulting in a nice pop in the stock. Apple and VISA headed to new highs with the market. The position that had the most impact was Syngenta (Ticker: SYT) (~26% position), which finally received the required regulatory approvals and is moving towards a May close.

After Syngenta closes, I won’t have any merger arb / special situation plays, which would be odd! I am doing some work on some merger arb / special situation plays and hoping to initiate some position(s) soon…

In summary, I’m pleased with my year to date performance considering how January turned out. I’ll continue to play it relatively conservative for the remainder of the year. Last year, my performance suffered in the second half of the year as I entered into a couple of large positions that blew up so I’ve learned my lesson.

2017 Performance Year to Date = +15.39% with the running monthly returns as follows:

January -4.50%
February +10.18%
March +5.1%

April +4.34%