The China Fund Buy Back Result

The China Fund, Inc. (Ticker: CHN) announced the final tender results today. The fund will be buying back shares at $23.12 with odd lot shares taking priority. I bought odd lot shares and tendered in a couple of accounts so I'll have some extra lunch $$$ coming my way. For awhile there I thought I might actually lose money on this tender play because of the recent sell off in the Asian markets.

Sold A Little Nexen

I decided to reduce my risk exposure a bit and lightened up on my holding in Nexen, Inc (Ticker: NXY). I sold 1/3 of my position today at $25.76 generating a net gain of 0.43% over a one day period. I don’t want to ruin a good year so far with an unexpected blow up.

Edit: I sold some more Nexen at $25.83, which cuts my holding in this position to ~ 6%.

Talbots Update and Some Nexen

Today, Talbots (Ticker: TLB) and Sycamore received the approval from the Office of the Comptroller of the Currency (OCC) to proceed with merger. Now we just need 90% + shares tendered to finally finish this one off. This arb play has gone rather smoothly considering all of the conditions that were put in place. Hopefully this one closes next week.

I continued to build my position in Nexen (Ticker: NXY) with an average price of $25.75. It’s hard to imagine that Canada will block this deal. If they do, they can pretty much forget about doing any biz with China. Canada has only blocked two mergers for not generating a net benefit to the country. I like the odds of this deal closing and will continue to add to this position.

Finally, I initiated a position in Ancestry.com, Inc. (Ticker: ACOM) today at $32.36. Two private equity firms are circling the company: Permira Advisers and Providence Equity Partners. The price being floated around is $35 +. Second round bids are due in early August.

Edit: I sold my position in Ancestry.com on 07/27/12 at $32.40. Looking to get back in at a better price.

Nexen, Inc. Arb Play

I’ve been trading in and out of Nexen, Inc. (Ticker: NXY) for the past two days and generating some pocket change. During this time, I've been also evaluating the possible regulatory risks with its takeout by Cnooc, Ltd. My conviction is growing that this deal will be cleared by the regulatory agencies. Cnooc definitely did their homework by performing a lot of pre-vetting to increase the odds of this deal going through. Today, I started building a position as an arb play. It’s still a relatively small position, but will add to it. My current average price is $25.82, which will equate to a net return of 6.5% (~ 15% annualized return assuming an end of year close).

Talbots Almost Done

It looks we’re close to the finishing line with the Talbots, Inc. (Ticker: TLB) acquisition by the private equity firm, Sycamore Partners. On Friday, Talbots received the ok from the PBGC and the financing proceeds condition was removed. These are two very positive developments for the deal to close without any significant delay. I added a bit more Talbots today at $2.71 and tendered the shares. Assuming a 08/17 close, I’m looking at a net return of 1.47% (~ 20% annualized).

I also took a stab at Nexen, Inc. (Ticker: NXY), which is being acquired by Cnooc Ltd. (the giant China oil company). I picked up a few shares at $25.81 and subsequently sold at $25.94 for a quick 0.50% gain. The company is expecting a Q4 closing, but I think that is a bit optimistic considering the sensitivity by Canada on such a large acquisition by a Chinese company.

The China Fund, Inc. Tender Offer

It’s still fairly quiet on my end… I picked up some odd lot shares in a closed end fund, The China Fund, Inc. (Ticker: CHN), today at around $21.95 and tendered the shares. There is a tender offer in which the fund is purchasing shares at 99% of its NAV with odd lot taking priority. As of July 13th, the NAV was $23.75 so you’re looking at ~ 6.5% return.

Mid Year Performance

I decided it was time to take a look at my mid year performance. So far it’s been a good year. I don’t like to use relative performance as in comparing how you do against an index. I aim for absolute performance regardless how the index performs. The special situations / arb plays definitely help deliver some nice abnormal rates of return (alpha). So far my non-retirement portfolio in which I can employ the use of leverage (margin) is up 49.94% year to date. My retirement portfolio, which I can not use leverage is up 28.41% year to date. The bulk of my gains where in the beginning of the year in which I made big wagers on two arb plays: Pharmasset and Inhibitex. I basically split my portfolio into growth companies and special situation / arb plays. I keep the growth portion of the portfolio fairly simple with holdings such as Apple, Visa, MasterCard, etc… I will go in heavy with leverage if I have a strong conviction on an arb play. Right now, I’m just trying to take it easy and make a few $$$ here and there. Now is not the time to be greedy...

Tendered Talbots, Inc.

I tendered my shares in Talbots, Inc. (Ticker: TLB) today. I initially had a fairly large position and reduced it to a more comfortable level. It currently makes up ~ 15% of my portfolio down from ~ 40%. There’s definitely some risk in this arb play as observed in the wide spread. Bloomberg has nice a write up on the Talbots merger today (click: here).

Jakks Pacific, Inc. Tender Offer Experiment

I did a little experiment with the Jakks Pacific, Inc. (Ticker: JAKK) tender offer. I’ve always assumed that you can perform only one odd lot tender per person regardless of how many accounts you may have. The tender offer specifically spells this out. I tendered Jakks Pacific shares in multiple accounts within the same brokerage firm as well as tendering the shares at a different brokerage firm. I thought tendering within the same firm would not qualify me for the odd lot priority since I would be over 99 shares (99 shares X 2). Yesterday, I got credited for the amount of $20 X 99 shares in all of my accounts for Jakks Pacific. Good to know next time when there is a tender offer with odd lot priority.

Dollar Thrifty Automotive Group, Inc.

On Tuesday, I picked up some Dollar Thrifty Automotive Group, Inc. (Ticker: DTG) at $82.56. Hertz Global Holdings, Inc. (Ticker: HTZ) has been pursuing this company for awhile. All indications are leading to a potential deal fairly soon. I’ve seen potential take out prices ranging from the mid $80’s to $90 plus. Time will tell…

Edit: I sold my holding in Dollar Thrifty Automotive Group today at $83.67 generating a net gain of 1.27% over a two day period.