Medco Health Solutions and Illumina

I’m back in Medco Health Solutions (Ticker: MHS). Yesterday there was a SEC filing by Express Scripts suggesting that this deal could close next week. I started building a position with prices ranging from $71.08 to $71.41.

Also, the Illumina (Ticker: ILMN) play is getting interesting as Roche (Ticker: RHHBY) raised their offer price to $51 per share. Now, I have to decide how to play this since I only have a small position. I’ve sold the April $52.50 calls at $1.00 against my position. I'll most likely start adding to this position...

Out of Jaguar Mining

I folded my position in Jaguar Mining, Inc. (Ticker: JAG). I initiated a small position in February at $6.77 based on the fact that the company was exploring strategic alternatives. The stock has been acting horribly and yesterday, the company announced earnings that were below views. I sold today at $4.95 generating a net loss of 18.55% (including the income from the covered calls). I generally try to limit my losses at ~ 10%, but this one got away from me a bit.

Some More Motorola Mobility

I added to my position in Motorola Mobility Holdings, Inc. (Ticker: MMI) today at $39.17. Right now, I’m factoring in ~ 30 days to close this deal. It looks like China is seeking some sort of remedy from this deal before giving its ok. It’s hard to see how China can block this deal from a purely competitive angle, but you never know when politics come into play. My average cost is $39.51, which will equate to an annualized return in the low to mid teens.

Edit:

Ok, I just sold those shares of Motorola Mobility Holdings, Inc. at $39.22 for a small profit. Just got a bit trigger happy!?

Out of Medco Health Solutions and Bad Timing on Motorola Mobility

“When in doubt close it out” as the saying goes with options trading. I held onto my Medco Health Solutions, Inc. (Ticker: MHS) one day too long. I was expecting to let my covered call expire and let them take away my Medco stock at $70. Medco closed in the money, but after the market close, Bloomberg reported that a couple of States we’re looking at filing lawsuits to block the merger. Of course the stock dropped in after hour trading so my covered call did not end up getting assigned. I sold my position in Medco this morning at $69.03 resulting in a net gain (including the proceeds from the covered call) of 1.86% or ~60% annualized return. So I can't complain too much...

Ooops, I was a bit off with my timing in Motorola Mobility Holdings, Inc (Ticker: MMI). Mofcom is extending their phase 2 review. I do believe this will close, but obviously not as soon as I had hoped.

Sold Venoco and Back in Motorola Mobility

I sold my holding in Venoco, Inc (Ticker: VQ) today at $11.01 and just broke even on this trade. Even though this was just a small position, there was just too much risk. I just don’t have a fuzzy feeling when there is no committed financing in place. As they say: "show me the money…"

I’m back in Motorola Mobility Holdings, Inc (Ticker: MMI) at $39.68. We should hear by March 20th regarding China’s decision (MOFCOM) on this merger. I’m factoring in a closing date of March 23rd for this deal, which will equate to an annualized return of ~32% (0.80% net gain).

Medco Health Solutions Getting Closed Out

It looks like my Medco Health Solutions, Inc. (Ticker: MHS) trade is going to get closed out this week at options expiration. When I opened the position in Medco Health Solutions, I also sold the March 70 calls for $0.95 against my position. I’ll be making a decent return of 3.3% or ~ 108% annualized (including the proceeds from the covered calls) with this trade. Again I went “All In” with this trade.

Initiated a Position in Venoco and Medco Health Solutions

Here’s an update on my merger arb positions:

I initiated a small position in Venoco, Inc. (Ticker: VQ) at $11.00. This is a management buyout play in which the CEO is offering $12.50 per share in cash for the company. The big warning bell about this deal is that there was no committed financing when the deal was struck. I do believe the CEO will find financing for this buyout considering where the price of oil is currently trading. This one is risky so I would not put on a big position even though the potential return is very attractive.

I sold my position in Motorola Mobility Holdings, Inc (Ticker: MMI) at $39.71 generating a whopping 0.01%. I used the proceeds to aggressively add to a new position in Medco Health Solutions, Inc. (Ticker: MHS) on Friday with prices ranging from $68.56 to $68.68. This deal is looking like it will get the go ahead from the FTC. MedcoHealth shareholders will receive $28.80 in cash and 0.81 shares in Express Scripts, Inc. (Ticker: ESRX) if the deal goes through.

Some Motorola Mobility

I picked up some Motorola Mobility Holding, Inc (Ticker: MMI) yesterday at ~ $39.68. It’s looking like an ok arb play with a potential annualized return of 11.50 to 16% depending on the closing date. I’m looking at a potential closing by March 23rd. The only remaining piece is approval by MOFCOM, which could happen at anytime with a deadline of March 20th. All of the other countries with antitrust reviews have given their ok on the acquisition of Motorola Mobility by Google (Ticker: GOOG).

American Realty Capital Trust Inc

It’s been really boring without any good M&A plays out there. This morning as I was reading the Wall Street Journal, I noticed a tombstone ad detailing the tender offer for American Realty Capital Trust Inc (Ticker: ARCT). The company is conducting a tender offer to purchase shares from a minimum price of $10.50 to a maximum price of $11.00. It looks like odd lot shares will take priority. I picked up 99 shares at $10.02 this morning and looking to make a few extra $ for lunch money.

Right now, I just have tiny positions in Illumina (Ticker: ILMN) and Jaguar Mining (Ticker: JAG). I’m not looking to go big in any way with these positions. Illumina is being stalked by Roche and Jaguar Mining is going through a strategic alternative review. Just make a few $ if it works out…