Tuesday, December 31, 2013

Sold Genzyme CVRs

I sold out my position in the Genzyme Contingent Value Rights (Ticker: GCVRZ) today at $0.33 generating a nice loss of 86%. I received these shares in 2011 from the acquisition of Genzyme by Sanofi. I was waiting until the very end with the small hope that the FDA will approve Lemtrada, but that was not the case. This position made up ~ 2.8% of my portfolio so it was a small hit. The best case scenario remaining for these CVRs is hitting the $400 million in sales for a $2.00 payout. This is possible, but it will be a big challenge to achieve this milestone without US approval. The highest numbers I’ve seen is $500 million in ex US peak sales and that is looking out several years.

I built up my position in RDA Microelectronics, Inc. (Ticker: RDA) by selling some more of the June 2014 $17.50 Puts for $0.35. I have a decent position and now it’s just waiting for the PRC approval. This should be a relatively straight forward regulatory process as this merger may not require the approval from the National Development and Reform Commission (NDRC) based on new rules that was recently announced. Just need the approval from MOFCOM.

Monday, December 30, 2013

Some RDA Microelectronics, Inc.

I initiated a position in RDA Microelectronics, Inc. (Ticker: RDA) today by selling the June 2014 $17.50 Puts for $0.30. Tsinghua Unigroup is acquiring the company for $18.45 ($18.50 - $0.05 ADR fee = $18.45) in cash. RDA Microelectronics shareholders approved the merger on 12/27 and all that remains are the PRC regulatory approvals. I anticipate this deal closing in Q2, 2014. Tsinghua Unigroup just closed its acquisition of Spreadtrum Communications so they are good with the cash.

Monday, December 16, 2013

Spectrum Communications = Done Deal

Spectrum Communications (Ticker: SPRD) is finally going to close. Today, the company issued a press release stating that they have obtained all PRC regulatory approvals and plan to close the week of 12/23. I sold a bunch of the Jan 2015 $30 Puts for $0.50 and will let those expire in January 2014. This arb play worked out well as I was playing the common early on and then switched to selling the Puts. I was too optimistic in terms of the closing time when I was playing the common. I’ve learned to give plenty of time for a closing when you’re dealing with the PRC.

Thursday, December 12, 2013

Hilton Worldwide IPO

I received a small allocation (the usual 100 shares) in Hilton Worldwide (Ticker: HLT). I usually avoid IPOs from private equity exits, but in this case I like that Blackstone is not selling any shares in the IPO. Although it’s nice to receive an IPO allocation, it’s often only a tiny amount of what you requested. So I’ll hang on to my Hilton Worldwide for 30 days to comply with the brokerage firms flipping policy and then see what happens.

Wednesday, December 11, 2013

ViroPharma Almost There

Shire (Ticker: SHPG) received US anti-trust approval for its acquisition of ViroPharma (Ticker: VPHM). The remaining conditions are the approval from the UK OFT, which has a decision date by February 10, 2014, and the minimum tender of the shares. I’ve been playing this deal by selling the Jan 2016 45 Puts with prices ranging from $0.30 to $0.40. I kind of over did it and sold more Puts than I should have. In any case, this trade is working out after today’s news. Obviously, the risk has been significantly reduced with the US anti-trust approval. There shouldn’t be any problems with the UK OFT as the UK has generally been lenient on mergers. So I’m targeting a close after the UK OFT renders their decision.