Sold Rest of Del Monte Foods

I sold off the rest of my Del Monte Foods (Ticker: DLM) position today at $18.86. There is a possibility of a higher bid during the “Go Shop” period, but the probability is low. Holding here until closing would generate an additional return of only 0.74% (~2.97% annualized). This was not worth it and the stock will drop back down if a higher price doesn’t materialize during the “Go Shop” period.

I took a tiny position in Soda Stream (Ticker: SODA) today @ $40.78 just for the fun of it. It’s an interesting little company with lots of potential. They report earnings after the bell today and it will most likely be good since it’s their first earnings report as a publicly traded company. Plus, I’m actually tempted to buy their product.

Edit:

I just sold my position in Soda Stream @ $42.00 for a 2.99% gain.

Del Monte Foods for $19.00 (Now Official)

Well, it’s official now… Del Monte Foods (Ticker: DLM) issued a press release stating that it has signed a definitive agreement to be acquired for $19.00 per share by KKR (Ticker: KKR), Vestar Capital Partners and Centerview Partners (click: here). An interesting note is that there is a “Go Shop” clause in which Del Monte Foods can solicit higher bids through January 8th. I wouldn’t be surprised if they are successful in soliciting a higher bid. This company is a prime target for private equity.

Here are my Del Monte Foods trades:

11/19/10 Bought 2X @ $17.549
11/19/10 Bought 1X @ $17.4199
11/19/10 Bought 0.5X @ $17.2999
11/19/10 Bought 0.5X @ $17.1999
11/19/10 Bought 1X @ $17.2496
11/19/10 Sold 1X @ $17.37
11/23/10 Bought 1X @ $17.2196

Net long 5X with an average price of $17.397

Edit:

11/26/10 Sold 1X @ $18.77

I will hold the remaining 4X to see if anything develops during the "Go Shop" period.

Del Monte Foods for $19.00

The New York Times DealBook blog just reported that Del Monte Foods (Ticker: DLM) has agreed to be acquired by a group of private equity investors (KKR (Ticker: KKR), Centerview Partners and Vestar Capital Partners) for $19.00 per share (click: here). That’s $0.50 per share higher than the initial rumored price of $18.50 per share. Not bad…

Almost There with Del Monte Foods

A very nice move in Del Monte Foods (Ticker: DLM) today! Bloomberg is reporting that Centerview Partners and Vestar Capital Partners will be joining KKR (Ticker: KKR) in the leveraged buyout of Del Monte Foods. They are looking to finalize the deal within the next few days. I have a good position in this one so no complaints. I don’t know why this had such a wide spread for a fairly safe risk arb play. Take it when you can…

Some Del Monte Foods

Yesterday, I picked up a few shares of Del Monte Foods Company (Ticker: DLM), which is rumored to be taken over by KKR (Ticker: KKR) in a leveraged buyout. The price being floated around is $18.50 per share. I purchased shares throughout the day with an average cost of $17.45 per share. We should hear in a week or two whether they are able to close this deal or not.

I’ve also been trading Massey Energy (Ticker: MEE), but that’s a tough one to place a big bet on. The board will decide next week whether to seek strategic alternatives (aka sale of the company). The CEO does not want to sell, but may not have a choice. I’m keeping a close eye on it.

My largest arb play is in Genzyme (Ticker: GENZ) and I have a strong conviction on this one. I’m adding to my position anytime it falls into the $69 to $70 range. I believe patience will be well rewarded.

Genzyme and Sanofi-Aventis (The Next Move)

The next crucial date on the Genzyme (Ticker: GENZ)/ Sanofi-Aventis (Ticker: SNY) saga will be November 28, which is the date that Genzyme has to complete the move of its fill / finish operation for Cerezyme, Fabrazyme and Thyrogen out of their Allston manufacturing plant. If Genzyme does not meet this deadline, then the FDA can require the company to cough up 18.5% of revenue from these products. Sanofi is not going to make any move until it is clear that Genzyme is resolving its manufacturing issues and meeting the November 28 deadline will be a crucial test. I’m expecting Sanofi to do something around this time. Sanofi can increase the tender offer price, but must do so 10 business days before the expiration of the tender offer (the current tender offer expires on December 10). If Sanofi wants to increase the tender offer price, they have to do it by November 29. Many are speculating that Sanofi will simply extend the tender offer to buy additional time. In any case, I’ve continued to add to my Genzyme position.

Out of Crucell and More Genzyme

I’ve been trading Crucell (Ticker: CRXL) heavily and now I am completely out of the stock. Crucell is a great risk arb play except for the fact that the acquisition price in is Euros. I have no doubt that this deal will close, but now the Euro looks very shaky and a declining Euro can wipe out the potential risk arb profits. Of course you can hedge by selling the Euro, but I like to keep it simple.

I started adding more to my Genzyme (Ticker: GENZ) position today. The big arb players are all over this. I can’t see how Genzyme stays independent with so many shares in hands of the arbs. One of the arb players I closely follow is Paulson & Co. In today’s SEC filing, Paulson picked up ~ 1.9 million shares in Genzyme. The 13F-HR filings for John Paulson (click: here).

Back In Crucell Again

I’m back into Crucell (Ticker: CRXL) this morning at $32.30. I like to trade around the risk arb positions, but I’ll probably end up holding this one until closing. I don’t want to over trade this and miss the pop when they announce the results of the investigation. The Korean FDA will be reviewing the results of the investigation, which is expected for an event like this. Right now, I really like the Crucell / Johnson & Johnson (Ticker: JNJ) and the Genzyme (Ticker: GENZ) / Sanofi-Aventis (Ticker: SNY) risk arb plays.

Sold Crucell

I sold my position in Crucell (Ticker: CRXL) today at $32.57 generating a 0.86% gain (~77% annualized return) over a 4 day period. Nothing wrong with this risk arb play, but I just wanted to free up some cash and reduce my margin just a bit. The market has had a good run and there may be some good opportunities brewing.

More Crucell

When you have a strong conviction in a trade, you just have to go with it. I continued to add to my position in Crucell (Ticker: CRXL) today at $32.15 and $32.10. I believe Crucell with the assistance of Johnson & Johnson (Ticker: JNJ) will complete their investigation of the potential contamination issue at their Korean manufacturing facility. This facility is being phased out in 2011. The manufactured products from the Korean facility are currently placed on hold pending the completion of the investigation. Once the investigation has been completed, they can justify the release of the products. They have stated that they plan to complete their investigation by the end of November. I really like this risk / reward opportunity.