Sunday, December 03, 2017

November 2017 Performance

November was cruel as my portfolio was up nicely for a good part of the month and then a sell off right at the very end. The November results does not reflect the blow up in Axalta Coating Systems (Ticker: AXTA), which was close to being acquired by Nippon Paint. Nippon Paint couldn’t bump their price and walked away from the deal. This blow up will be reflected in the December results (~ 1% loss from an overall portfolio perspective). I was able to escape with minor wounds from this blow up, but this one really irritates me. This will be a nice lessons learned…

Going into December, I have the following merger arb plays: Aetna (Ticker: AET) (long common) and Buffalo Wild Wings (Ticker: BWLD) (short Puts). Aetna was really a gamble and it looks like it will pay off (we’ll see how it opens Monday). I see Buffalo Wild Wings as a relatively safe arb play with a closing by the end of Q1.

I will try not to do any additional foolish trades for the remainder of the year. So far this year, I’ve had two blowups: Rite-Aid (Ticker: RAD) and Axalta. No matter how small a position you may have, a blowup really stings. Just have to erase it from your mind and move on…

2017 Performance Year to Date = +42.65% 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%
July + 2.76%
August + 4.81%
September + 0.48%
October + 6.57%
November + 0.1%

Wednesday, November 29, 2017

Some Axalta Coating Systems

It’s really boring sitting out there without a merger arb / special situations play. So today, I initiated a position in Axalta Coating Systems (Ticker: AXTA) at an average price of ~ $37.50 (~ 7.7% position). It looks like an all cash bid from Nippon Paint will occur shortly. I’ve seen price talk ranging from low to mid $40s so we will see…

Wednesday, November 01, 2017

October 2017 Performance

October was a mirror image of September as my larger holdings such as Apple (Ticker: AAPL), Constellation Brands (Ticker: STZ) and Visa (Ticker: V) came back to life. My short Puts in Kite Pharma finally expired after the successful acquisition by Gilead (Ticker: GILD). All in all, it was a positive month with the portfolio generating a net gain of 6.57%.

I am playing things relatively safe for now. I just entered into a merger arb play in Planet Payment, Inc. (Ticker: PLPM), which is being acquired by Fintrax Group for $4.50 in cash via a tender offer. This deal requires only a tender by the majority of shareholders. Management has already agreed to tender their shares representing 28% of the outstanding shares. The tender offer is expected to expire on 12/18. I was able to pick up a few shares of Planet Payment at $4.47 (~ 10% position), which will hopefully result in a net gain of 0.67% (~ 4.64% annualized return, assuming cash hits my account by 12/22).

Just trying to maintain the gains through the end of the year...

2017 Performance Year to Date = +42.51% 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%
July + 2.76%
August + 4.81%
September + 0.48%
October + 6.57%

Friday, September 29, 2017

September 2017 Performance

September was a bit challenging as many of the growth stocks in my portfolio generated flat to negative returns. One of my larger positions is Apple (Ticker: AAPL), which was down ~6% and other large positions such as Constellation Brands (Ticker: STZ) was down slightly and Visa (Ticker: V) was only a slight positive. The growth stock portion of my portfolio was a big drag this month.

What saved the month was the merger arb play in Kite Pharma (Ticker: KITE), which is being acquired by Gilead (Ticker: GILD). I pretty much went all in via short Puts and this deal is on track to be completed next week. I really liked this deal as it was structured as a tender offer, which equates to a quick regulatory review and close. I also generated some small gains in Rockwell Collins (Ticker: COL) and Alere (Ticker: ALR). It’s nice to see the special situation / merger arb activity picking up.

I continue to be very cautious in this market environment, but will aggressively pounce on high probability merger arb / special situation plays.

2017 Performance Year to date = +33.72% 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%
July + 2.76%
August + 4.81%
September + 0.48%

Tuesday, September 05, 2017

Rockwell Collins & Kite Pharma Update

I sold my shares in Rockwell Collins (Ticker: COL) this morning generating a net gain of ~1.5% over a 7 day period. The equity component of this transaction was higher than what I had expected. I didn’t want to hang around to the end with this one.

Gilead’s (Ticker: GILD) transaction of Kite Pharma (Ticker: KITE) appears to be ahead of schedule. Gilead commenced the tender offer today with the tender expiring on October 2nd. I sold some more Puts today.

Sunday, September 03, 2017

August 2017 Performance

All in all, the portfolio generated a net gain of 4.81% for the month. The positive result for August was primarily attributed to Apple (Ticker: AAPL) and Alibaba (Ticker: BABA), which both gained over 10% for the month. My other positions: Constellation Brands (Ticker: STZ), MasterCard (Ticker: MA), Visa (Ticker: V) and Sanofi (Ticker: SNY) gained between 3 to 4% for the month. The only loser was Qiagen (Ticker: QGEN), which generated a loss of ~ 2% for the month. I also generated some small gains in the following merger arb plays: Scripps Network Interactive (Ticker: SNI) and MRV Communications (Ticker: MRVC).

I did enter two special situation plays recently: Rockwell Collins (Ticker: COL) and Kite Pharma (Ticker: KITE). Rockwell Collins is currently being targeted by United Technologies (Ticker: UTX) with a rumored price around $140. I have ~ 9.5% position in this play and looking to a definitive agreement soon. Kite Pharma agreed to be acquired by Gilead Sciences (Ticker: GILD) for $180 per share in cash. This deal is structured as a tender offer with a potential close in the second week of October. I am playing the Kite Pharma deal via short long dated Puts.

I continue to be on the defensive with a cash cushion. I start to worry when individual investors start piling into the market as observed in the new account openings at discount brokerages. And the fact that I am doing this well is a big warning signal!


2017 Performance Year to date = +33.08% 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%
July + 2.76%
August + 4.81%

Wednesday, August 02, 2017

Bought MRV Communications, Inc.

I initiated a position (~7.4% position) in MRV Communications, Inc. (Ticker: MRVC) at $9.95. MRV Communications is being acquired by a German company, ADVA Optical Networking SE for $10.00 in cash. This deal is being structured as tender offer with the tender expiring on 08/11/17. I am modeling that this deal closes on 08/11/17 with the cash hitting the account by 08/18/17. This would generate a net gain of 0.50% (~10.6% annualized return).