Sold Legacy Reserves LP

Well, I’m back from vacation and decided to take some profits in Legacy Reserves LP (Ticker: LGCY), an oil / gas limited partnership. I entered into this risk arb trade wayyy back in April right after Apollo Management offered to take the company private for $14 per share (unit). I picked up some shares at that time for ~ $13. I sold a few shares yesterday and the remaining today for a total return (including dividends) of 17.72%. I didn’t want to get greedy and in fact I lucked out a bit in this trade as the company rejected Apollo Management’s offer in June.

I've also continued to add to my Sun Microsystems (Ticker: JAVA) risk arb play. Like I said before, this is a very solid deal with minimal anti trust concerns. Oracle has stated that they plan to close this deal by the end of August. This is starting to look a bit aggressive and a more realistic closing is probably sometime in September. In any event, a closing in September still represents a decent return for an arb play.

Playing Sun Microsystems

My next arb play is Sun Microsystems (Ticker: JAVA). I'm just about finished building a decent position in this stock. So far the average cost for my holdings is $9.19. It's a pretty good risk / reward risk arb play. You're looking at ~ + 20% annualized return with an end of August closing. Oracle (Ticker: ORCL) has the cash already to pay for this deal. Just need to wait for the US and EU regulators to give their blessing. There shouldn't be any issues, but you never know. Regulators can behave irrationally at times...

Which Risk Arb Play Now?

With the closing of Nova Chemicals (Ticker: NCX), I started nibbling at another risk arb play. I picked up a few shares of Hiland Partners (Ticker: HLND), a gas limited partnership. This limited partnership is going private at $7.75 per unit (share). The downside for this stock is that it is very thinly traded. It took me several days just to build a small position. Definitely use limit orders with this stock. In any case, this deal is expected to close by the end of Q3 so you're looking at an annualized return of ~25%.

Nova Chemicals = Done Deal

Finally!!! Today, IPIC received the approval from Investment Canada to complete the acquisition of Nova Chemicals (Ticker: NCX). The deal is scheduled to close on Monday, July 6th. This initially started off as a small arb play and evolved into a big position. It'll be a nice little pay day! I'm still looking for some new risk arb plays, but there's nothing out there to get excited about. That's about it for now...