Friday, August 28, 2015

Receptos = Done Deal

Receptos (Ticker: RCPT) is finally done with the cash hitting my account today. I generated a net gain of 1.87% (25.73% annualized yield). I did not buy back any of my short Puts in Receptos so I will let those will expire worthless at the September options expiration. I’ll continue to play conservatively unless a very compelling opportunity arises. It’s going to take a bit of time for the market to repair itself from the recent sell off.

For those who want to make some lunch money, The St. Joe Company (Ticker: JOE) is initiating a tender offer for $18.00 per share. There is an odd lot priority so the company will purchase all shares tendered for those with 99 shares or less.

Thursday, August 20, 2015

Tendered Receptos

I tendered all my shares in Receptos (Ticker: RCPT) and looking for this deal to be completed next week. I will likely let the short Put positions in Receptos expire in September as well. This was a really nice risk / reward opportunity and hoping to see another one like this soon.

I did initiate a starter position (~ 4.5% position) in WuXi Pharmatech (Ticker: WX) at $43.60. They primarily perform outsourced R&D projects for pharma / biotech companies. This company is being acquired for $46.00 in cash via a management / consortium of private equity investors. This is a Chinese based company so I expect a China discount. I see this as a reasonable risk / reward opportunity assuming this deal is closes by the end of the year. This is definitely not one of those all in plays, but I can see myself going up to a 10% position at some point. 

My merger arb positions have really dried up… Just being patient and let the next opportunity present itself.

On a side note: I unfortunately did get a few IPO shares in Amplify Snack Brands (Ticker: BETR) at $18.00 per share. I was expecting a pop up and not a pop down! Anyways, it was a little lesson not to get too greedy. Fortunately, this was a tiny / negligible position. So no damage, but still I don’t like losses…

EDIT: I added to my holding in WuXi Pharmatech amid the market weakness (currently ~ 11% position).

Friday, August 07, 2015

Receptos Position

I’m finally finished building a long position in Receptos (Ticker: RCPT), which currently makes up ~ 28% of my portfolio. You’re probably aware that Celgene (Ticker: CELG) is acquiring Receptos for $232.00 in cash via a tender offer, which expires on August 24th. My average purchase price is $227.74 and looking for a net gain of 1.87% by the end of August (~23% annualized return assuming the cash hits my account on 8/31). I also sold a bunch of Puts on Receptos. We should know by next Tuesday if the antitrust regulators give the green light on this deal. When I see the odds are so much in my favor such as a deal like this, I’m very aggressive and play big. There’s also been a lot of speculation of a higher bid, but I just don’t see it happening.

Friday, July 31, 2015

July 2015 Performance

July turned out unexpectedly well with a net gain of 5.48% for the month. I would label this month as a transition as I closed out my merger arb positions in Altera (Ticker: ALTR), Hospira (Ticker: HSP) (short Puts) and Omnicare (Ticker: OCR). I used the funds to build up a large position in Receptos (Ticker: RCPT) by going long the stock and short Puts. I really like the risk reward in Receptos, which is anticipated to close by the end of August. Receptos is the type of deal that I am willing to go in big.

So what drove the gains for July? Visa (Ticker: V) and MasterCard (Ticker: MA) reported good earnings and drove the stocks nicely higher. Qiagen (Ticker: QGEN) participated in the biotech rally by breaking out to multi year highs.

And what didn’t work? Apple (Ticker: AAPL) delivered respectable earnings, but the market didn’t like it and sold it off.

So hopefully next month, I get to report that Celgene (Ticker: CELG) successfully completed its tender offer for Receptos. So that's it for now...

2015 Performance Year to Date = +21.85% with the running monthly returns as follows:

January +3.4%
February +7.03%
March -0.33%
April +0.39%
May +5.59%
June -1.2%
July +5.48%

Friday, July 24, 2015

Closed Out Hospira / Portfolio Update

I closed out my short Put positions in Hospira (Ticker: HSP) this week. I generated a decent gain and decided it was a good time to reduce my risk a bit. This was an unhedged (naked) position so if there are any hiccups with the US or EU antitrust regulators, I would be in a little bind. On the other hand, I continued to build a short Put position in Receptos (Ticker: RCPT) and I believe this deal will close rather quickly without any antitrust issues.

I haven’t done this for a while, but here is an overall snap shot of my current non retirement portfolio holdings and the percentage weighting:


Thursday, July 02, 2015

June 2015 Performance

June was certainly a challenging month with the macro events affecting the markets. It was a quiet time for me as I just basically held onto many of the pre-deal plays that were entered in the previous months. I’m still in the following merger arb positions: Altera (Ticker: ALTR), Omnicare (Ticker: OCR), Pall (Ticker: PLL) and Hospira (Ticker: HSP) via short Puts. I anticipate the Hospira deal to close next month.

I initiated a small position (~3%) position in Capitol Acquisition Corp II (Ticker: CLAC). This is basically a blank check company that is in the process of acquiring Lindblad Expeditions. Lindblad Expeditions is a small cruise line that has partnered with National Geographic’s in providing a high end / adventure cruise experience. I’ve always been intrigued with the cruise business and really like the attractive valuation of this deal. This acquisition should close next week pending shareholder approval.   

I’m playing a bit of defensive right now and just waiting patiently for good opportunities to show up.

2015 Performance Year to Date = +15.52% with the running monthly returns as follows:

January +3.4%
February +7.03%
March -0.33%
April +0.39%
May +5.59%
June -1.2%

Friday, May 29, 2015

May 2015 Performance

I've been fairly busy as you can see that my postings have diminished to once a month. Hopefully, I can get back into the zone and start posting more often.

So despite the market volatility, things turned out ok for the month. May was a merger mania month and I did jump on a few deals, which contributed positively to my monthly performance. I picked up some Omnicare (Ticker: OCR) (~10% position) and Pall (Ticker: PLL) (~ 13% position) as pre-deal plays, which fortunately worked out. I’m still playing Hospira (Ticker: HSP) via short Puts, in which this deal should close in ~ 3 months as the regulatory approvals start rolling in (I still can’t see why Pfizer (Ticker: PFE) received a Second Request from the FTC).

I also pick up some Altera (Ticker: ALTR) (~ 5% position) today as a deal may finally happen. I have to admit, I’ve been eyeing Altera for a while and am a bit late to the game. So we’ll see what happens next week with Altera and Intel (Ticker: INTC).

I’m still holding tight to my long term positions in Apple (Ticker: AAPL), Visa (Ticker: V), MasterCard (Ticker: MA), Qiagen (Ticker: QGEN), Constellation Brands (Ticker: STZ) and Vertex Pharmaceuticals (Ticker: VRTX). As they say, it’s the sitting that makes you the money.

2015 Performance Year to Date = +16.92% with the running monthly returns as follows:

January +3.4%
February +7.03%
March -0.33%
April +0.39%
May +5.59%