Saturday, May 02, 2015

April 2015 Performance

There was nothing eye opening to report in terms of performance for April. It was a blah, blah month… I did manage to squeeze out a small gain of 0.39% for the month. I’m trying not to force myself into any trades unless I see a good risk / reward opportunity. In this game, you really have to minimize any potential losses and not do anything stupid, which I sometimes (I mean many times) DO!?!

Ok, here's a briefing for April...

Constellation Brands (Ticker: STZ) reported nice earnings and I continue to hold on tight to this position. I’ve been in this position for ~ 2 years and continue to be my largest position. They are executing very well and will see much better margins once their manufacturing expansion in their beer biz is complete. The company will be initiating their first dividend starting this month, which was a bit sooner than I expected. This company is a really nice cash flow generator and I can easily see them raising the dividend and initiating a stock buyback in the future.

I did execute a few trades...

I took some small profits in Habit Restaurant (Ticker: HABT). I really like the Habit concept and believe they will be successful outside of their base in California. I sold based on valuation, it’s something you need to respect. Habit is currently trading at over 100 times earnings and growing at most around 40%. As they say, it’s priced for perfection and nothing stays perfect forever.

I’ve been continuing to build up my short Put position in Hospira (Ticker: HSP). I’m looking for this deal to close by August. It’s all about the antitrust approvals in getting this deal done. Recently, Pfizer (Ticker: PFE) pulled and refiled their filing with the antitrust regulators, which is actually a positive. This indicates that Pfizer could be close to some type of resolution with the regulators. I really like this risk / reward opportunity.

I just initiated a position in Omnicare (Ticker: OCR) as a pre deal play. I believe the odds of a deal occurring is high so we’ll probably hear something this month.

That’s pretty much sums things up for April…

2015 Performance Year to Date = +10.73% with the running monthly returns as follows:

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

Wednesday, April 01, 2015

March 2015 Performance

It’s been a challenging month with the market volatility. Overall my portfolio held up relatively well with a loss of 0.33% for the month.

So what worked and didn’t work? I took a stab at a pre deal play with LifeTime Fitness (Ticker: LTM). The Wall Street Journal was all over LifeTime Fitness and I liked the odds of a deal occurring. I continued to play Salix Pharmaceuticals (Ticker: SLXP) via short Puts and this deal just closed today. Finally, I did some bottom fishing with Veeva Systems (Ticker: VEEV) by catching a falling knife and managed to have all of my fingers still intact.

And now what didn’t work… Vertex Pharmaceuticals (Ticker: VRTX) slumped a bit on so so results from their clinical trial for Cystic Fibrosis. Gilead Sciences (Ticker: GILD) also continued to decline on concerns of continued competition for their Hepatitis C drug.

I’m fairy cautious right now and have actually raised some cash. Still searching for some good special situations / arb plays.

2015 Performance Year to Date = +10.30% with the running monthly returns as follows:

January +3.4%
February +7.03%
March -0.33%

Saturday, February 28, 2015

February 2015 Performance

February turned out to be another strong month. I was able to generate a net gain of 7.03%, which I certainly was not expecting. The majority of this gain was attributed to my holdings in Apple (Ticker: AAPL), VISA (Ticker: V), MasterCard (Ticker: MA), Constellation Brands (Ticker: STZ) and even Qiagen (Ticker: QGEN). These are my long term holdings, which I pretty much leave alone.

I have entered into a short Put position in Salix Pharmaceutical (Ticker: SLXP) and Valeant (Ticker: VRX) with the expectation that Valeant completes the acquisition of Salix shortly. I really like Valeant (with Michael Pearson as one of the best CEO's around) and entered a short Put with a shot at getting some shares at an attractive price. Other than that my only other merger arb / special situation positions are a short Put in Hospira (Ticker: HSP) and the Casa Ley CVRs. I’ll probably add to the Hospira position, but I want to get a good feel on the regulatory review before making my move.

I usually don’t go for the high flyers, but I did initiate a position in Habit Restaurant (Ticker: HABT). I just see a huge run way for this company to expand throughout the country. I’m looking at holding Habit for many years. As they say, time will tell…

2015 Performance Year to Date = +10.43% with the running monthly returns as follows:

January +3.4%
February +7.03%

Thursday, February 26, 2015

Sold Boston Beer

Investing is all about being objective and not letting your emotions take control of the situation. Yesterday, I sold a small position in Boston Beer (Ticker: SAM) in my retirement account because of its revenue short fall. Even though I still generated a small gain of ~ 13%, the paper gain was obviously much higher at one point. I enjoy their product (Angry Orchard) and was planning to hold for a while, but fundamentally it was a really bad quarter and they had to guide down for 2015. I listened in on the earnings call and I didn’t like what I heard as the company was facing more competition, decreasing market share (Angry Orchard), slowing growth, higher transportation costs, etc… Also this stock was selling at a high valuation. This was in contrast to Constellation Brands (Ticker: STZ), which was and is firing on all cylinders with its beer biz. Constellation Brands has had a great run and continues to be my largest holding.

Friday, February 20, 2015

Sold Salix Pharmaceuticals

I took my profits in Salix Pharmaceuticals (Ticker: SLXP) today @ $156.28 on talk that Valeant (Ticker: VRX) was close to making an offer. I was able to generate a net gain of 2.30% over 4 day period. This was a speculative gamble on my part. It was time to take a quick profit and move on. The merger arb space is fairly quiet right now so just need to be patient so a nice opportunity shows up.

Wednesday, February 18, 2015

A Little Salix Pharmaceuticals

Yesterday, I picked up a few shares (~ 5% position) in Salix Pharmaceuticals (Ticker: SLXP) at $152.77. So far we know there are at least three potential acquirers: Valeant (Ticker: VRX), Shire (Ticker: SHPG) and Endo (Ticker: ENDP). I view the likelihood of a deal as high and so far all signs are pointing to Valeant as the likely acquirer. I can see a 10% premium from the current price. This is a pure speculative play on my part so we’ll see…

Monday, February 09, 2015

Hospira Arb Play

Not much action in the special situations / merger arb space… I initiated a position in Hospira (Ticker: HSP), which is being acquired by Pfizer (Ticker: PFE) for $90.00 in cash. I’m playing this deal via Short Puts. I sold the August 2015 $80 Puts at an average price of $1.00. The companies anticipate the deal closing in the second half of this year. It too early to narrow down the closing time frame, but I don’t see any anti-trust concerns. Pfizer is essentially buying a specialized generic drug company. So for the moment, this is the only merger arb play in my portfolio (besides the Casa Ley CVR received from Safeway deal).