Thursday, October 27, 2016

Sold Tronc

I took a hit in Tronc (Ticker: TRNC) today. I was expecting news this morning of a definitive agreement with Gannett (Ticker: GCI), but obviously it did not materialize. There was also news later in the day that banks pulled out of financing for this deal. It was the financing news that told me to cut my losses and move on. I generated a super -29.39% loss on this special situation play. I had ~ 16% position in Tronc so the overall impact was a ~ 5% draw down on my portfolio. I learn the most from my losses and this was one nice lesson.

14 Comments:

At October 28, 2016, Anonymous Anonymous said...

Hi MT,

I am sorry you took such a big hit on Tronc. Did you have stop/loss order on it?

Also, do you have an updated opinion on Rite Aid and Alere.

Thank You

 
At October 28, 2016, Blogger lamano said...

Sorry to hear,

If it makes you feel any better: I actually added some after the conference call in the high 15 only to sell couple of hours later on the financing news by bloomberg.

In retrospect, I should have paid more attention to CEO discussion of 'only doing deals when the financing makes sense'.

Must say that the extent of the drop caught me a but off guard. With new equity issued at 15, was expecting some support a bit under that level...think again.

Cheers

 
At October 28, 2016, Blogger Money Turtle said...

I did not have a stop loss in place for Tronc. I'm not touching Alere right now, but my best bet is that it will probably prevail in it's lawsuit against Abbott. It's very hard if not impossible to get out of a merger agreement using the material adverse clause as a reason. Rite Aid is a tough one, Walgreen appears very confident, but market doesn't buy it. I may re-enter Rite Aid at some point, but not yet...

Losses is part of the game. I sized the Tronc position too large considering the risk. I also didn't have a strong conviction in the position. I just got complacent and sloppy on that trade.

 
At October 28, 2016, Anonymous Anonymous said...

Hi MT,
Can you further explain your thoughts on you strong conviction regarding ALK/VA merger?. With so many airlines, I still dont quite understand for the long delay.
Thanks

 
At October 28, 2016, Blogger Money Turtle said...

I like the odds of the ALK / VA merger obtaining DOJ approval. This combination will create a viable competitor against the big 4 airlines. The rational that the DOJ blocks this merger to prevent future consolidation in the airline industry just doesn't make any sense to me. If for some reason the DOJ decides to block the deal, I believe ALK has a strong case in Federal court.

I also looked at some old merger cases such as the previous airline consolidation and even the rental car case: Hertz and Dollar Thrifty. I can't see how the Fed approved these previous mergers and not this one.

From the chatter out there, it looks like ALK is close to or has finalized the concessions for submission to the DOJ.

 
At October 31, 2016, Anonymous Anonymous said...

happened to SGI merger and now to APIC today to. They let trade only on 0.05 tick increment and not anymore on 0.01, what is this a new rule? I don't understand what is the sense of this new rule. Please let me know if you can trade APIC today still with 0.01 increments. I can only buy at 17.35 and sell at 17.40 ... the deal close in 1 week. New rules?? very strange.

 
At October 31, 2016, Blogger DCFrancis said...

The tick increments of 0.05 is a two year pilot program to increase liquidity of smaller companies. Details here:

http://www.wsj.com/articles/fifteen-years-after-decimalization-tick-size-widening-for-some-small-company-stocks-1475421141

 
At November 01, 2016, Anonymous mergerpie.com said...

MT, what do you think about LinkedIn at this moment. Obviously EU is the last hurdle and spread has increased to 3.3% and decision is 20 days later..

 
At November 01, 2016, Blogger lamano said...

Tronc-Gannet deal terminated - always makes me feel a bit better when you cut your losses and it turns out to be the right decision.

 
At November 02, 2016, Anonymous Anonymous said...

they killed the trading with this 0.05 tick rule!!!! now in a lot of mergers we will have very few to trade!!! what a mess, crazy move! stupidity!!! no sense.

 
At November 02, 2016, Anonymous Anonymous said...

even in motorola-google deal the spread was like 10% or 9% I don't remember well just 1/2 days before the approval. I think LNKD it's a bargain deal and are silly the hedge funds with billions of cash to leave this spread so wide. Microsoft will give concessions... even if EU will ask more MSFT will give. I do not see why the spread should be like today, LNKD should trade at 191/192 at least. However, sometimes the market offer this opportunities..good that happen.

 
At November 03, 2016, Anonymous mergerpie.com said...

hmmm..i believe LNKD will get approval too..this is a nice opportunity..

 
At November 03, 2016, Blogger Money Turtle said...

I'm starting to really like LNKD around here...

Tronc - Gannett, the most important aspect of trading is cutting losses. When you start "hoping" something comes back, you're in trouble...

 
At June 26, 2017, Anonymous Kay said...

Ouch. Don't like it when it doesn't perform.

 

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