Friday, December 19, 2014

More Cubist Pharmaceuticals

I closed out my remaining position in Multimedia Games, Inc. (Ticker: MGAM) yesterday by buying back the short Puts. This deal will close in a few days, but I needed some more buying power. I continued to aggressively add to my position in Cubist Pharmaceuticals, Inc. (Ticker: CBST) with an average price of $97.75. This position currently makes up ~ 30% of my portfolio. I have a very strong conviction in this deal closing in a timely manner. Merck initiated the tender offer today as expected with the offer expiring on 01/20/15. It’s not often you encounter such a nice risk reward opportunity.

Thursday, December 11, 2014

LendingClub IPO

I decided to jump back into the IPO game and was able to snag a few shares of LendingClub (Ticker: LC). Obviously this was a hot offering (priced at $15 and opened around $24) and was very likely that I was going to be offered nothing. I’ll hang on to the shares for at least the next 30 days to comply with the brokerage firms flipping policy. In the meantime, I’ll do some more research into the company and decide if it’s something I want to build a position in. It is an intriguing company…

Tuesday, December 09, 2014

Initiated Position in Cubist Pharmaceuticals

I started scaling out of my Multimedia Games (Ticker: MGAM) position by selling the common and closing out some of the short Puts in order to allocate the funds to Cubist Pharmaceuticals (Ticker: CBST). I initiated a short Put position on Cubist yesterday, which was obviously a day too early! I initiated a long common position in Cubist today at an average price of $97.78. I see this as a very good risk reward play as Cubist sold off a bit on worries that Merck (Ticker: MRK) may pull out of the deal due to the adverse court ruling on Cubist’s lead product Cubicin. I can’t see how Merck if it even wanted to can pull out of this deal. No material adverse event (MAE) was triggered with this court decision and to pull out of a deal due to a MAE is a huge hurdle. The courts take a very dim view on those who try to back out of a deal using MAE as an excuse. In any case, I can see this deal closing in ~ 60 days via tender offer with a potential net gain of 4.31% or ~ 25% annualized.

Friday, November 28, 2014

November Performance

November was one of those months where everything worked out, which makes me a bit nervous. Apple (Ticker: AAPL), 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 (Ticker: SGMS) 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 (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 (Ticker: BHI) 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%