The Big Picture

I've received some comments asking about my portfolio performance. Here's a snap shot from my Merrill Lynch account. Merrill Lynch has a great quarterly report detailing how your portfolio is performing against the S&P 500. I didn't have time to crunch the numbers in my other account yet. Anyways, here are the returns from 6/1/08 to 12/31/09. All the trades were self directed and not based on any broker recommendations. Oh, and why start with 6/1/08? That's when I opened the Merrill Lynch account.

1 Yr Period	My Return	S&P 500
6/1/08-6/30/09	-10.60%	-26.23%
6/1/08-9/30/09	+12.11%	-6.93%
6/1/08-12/31/09	+86.53%	+26.45%

Entire Period	My Return	S&P 500
6/08-9/08	-16.31%	-16.09%
6/08-12/08	-36.39%	-34.52%
6/08-3/09	-20.30%	-41.73%
6/1/08-6/30/09	-14.41%	-30.38%
6/1/08-9/30/09	-4.67%	-16.93%
6/1/08-12/31/09	+3.32%	-11.23%

More 3Com

3Com Corporation (Ticker: COMS) sold off 1.30% today. I’m assuming some are fearing that China will hold off the approval of the acquisition of 3Com by Hewlett Packard (Ticker: HPQ) because of the Google vs. China battle. I think this sell off in 3Com is an over reaction. I don’t see how the 3Com + Hewlett Packard is anti competitive in the Chinese market. I’m anticipating approval from the Chinese Ministry of Commerce by the end of April. Anyways, I loaded up on more 3Com at $7.60.

Sold SkillSoft PLC

I folded on SkillSoft PLC (Ticker: SKIL) at $10.70 generating a 3.43% loss. After listening in on today’s earnings call, the probability of a higher bid is very small. You can’t win all the cards, but you have to know when to fold when the odds are no longer in your favor. The risk arb game is all about evaluating the odds and knowing when to go all in or fold. You need to have some chips to play another hand.

Sold Hardinge

It’s time to tone down the risk just a tad with my risk arb plays. Today, I sold Hardinge, Inc (Ticker: HDNG) at $8.20 generating a 1.36% gain or 13.78% annualized return. The company is trying to fight off a hostile offer from Industrias Romi, a Brazilian tool maker, for $8.00 per share. The company isn’t expected to return to profitability anytime soon so it’s hard to see a significantly higher bid. I’m not happy with the return because I incurred too much risk to generate this return. This was a thinly traded stock and was very hard to sell at decent price. There were very few bidders on most days, but I noticed some bids today and decided to pull the trigger.

Still Looking for a Higher Price in SkillSoft

SkillSoft PLC (Ticker: SKIL) sold off 4.88% today because they came up empty handed during the “go shop” period. The stock closed at $10.71 with a buyout price of $10.80. I got in at $11.08 so just a minor loss at this point. After the bell, the company reported top and bottom line numbers that beat analyst estimates. They’re selling this company for a give away price and there’s NO way they will get shareholder approval for a takeout price of $10.80. I’m voting NO! If the private equity group does not increase their bid, then there’s no deal. The company is turning around as the economy recovers and the stock should do well. This company is a money machine with a gross margin of ~ 90%!

Airgas Again!

I got back into Airgas (Ticker: ARG) today at $64.53 after selling it a few days ago at $65.74. It was a small pullback and also goes ex dividend tomorrow so it was an ideal opportunity. Air Products (Ticker: APD) wants this and I believe it will eventually get Airgas, but at a much higher price. Money talks and the deal will happen…

Sold Argon ST

Ok, one more sell to finish out the day. I sold Argon ST (Ticker: STST) today at $25.30 generating a 1.85% return over a 52 day period. This translates into a 12.99% annualized return, which is a horrible return for a risk arb play. In the risk arb game, you shoot for at least a 20% annualized rate of return. Again, I evaluated the risk and it was a bit high with no certain offer(s) in hand.

Sold OSI Pharmaceuticals

I also just sold my position in OSI Pharmaceuticals (Ticker: OSIP) at $56.34 generating a 0.73% gain over a 5 day period. This deal valued OSI Pharmaceuticals at a very rich premium and I see the upside capped at $60. I could get greedy and hope for $60, but the risk reward was just too high. With the economy showing signs of life, it’s time to transition into growth companies.

Sold Airgas, Inc

This morning I sold my position in Airgas, Inc (Ticker: ARG), Inc at $65.74, which translates to an 8.87% return over a 1 month period (Airgas, Inc was purchased on 2/5/10 at $60.38). Although this was a relatively small position, it’s still a nice gain. You can’t get too greedy with the risk arb plays since there is a limit to the upside.

Skill Soft PLC (Go-Shop Period Ending Soon)

The “Go Shop” period for Skill Soft PLC (Ticker: SKIL) ends on March 6, 2010 so we should know early next week if there are other offers on the table. From the SEC filing, there were 6 parties digging through the companies numbers and could possibly make a bid. Here’s the statement from the preliminary proxy: “As of 19 February 2010, Credit Suisse, on behalf of and at the request of Skill Soft, contacted 39 parties, of which 6 have entered into Confidentiality Agreements with Skill Soft and have been granted access to the electronic data room.” I just can’t see how anyone is willing to sell this company at such a low price ($10.80 per share). We’ll see soon if another bidder emerges…

Currently Reading: Manias, Panics and Crashes

I haven't read a finance book for awhile. So I recently picked up:



Not bad so far... It's worth checking out for those finance buffs.

Sold Millipore

I sold off my position in Millipore (Ticker: MIL) this morning at $104.92. The annualized gain going forward was going to be very small since the closing will take place in the second half of the year. My gain from this transaction was 16.67% over a 9 day period. As the old saying goes, time is money…

Astellas Pharma Goes Hostile on OSI

Here we go again, another hostile take over attempt. Today, Astellas Pharma made a hostile bid for OSI Pharmaceuticals (Ticker: OSIP) for $52.00 per share in cash. Astellas Pharma is not going to let this one get away like CV Therapeutics. Astellas Pharma lost the bidding war for CV Therapeutics to Gilead Sciences (Ticker: GILD) in early 2009. I see a very high probability that Astellas Pharma will end up with OSI Pharmaceuticals at a much higher price. I picked up some OSI Pharmaceuticals at $55.93. The fun is just beginning…