Wednesday, November 01, 2017

October 2017 Performance

October was a mirror image of September as my larger holdings such as Apple (Ticker: AAPL), Constellation Brands (Ticker: STZ) and Visa (Ticker: V) came back to life. My short Puts in Kite Pharma finally expired after the successful acquisition by Gilead (Ticker: GILD). All in all, it was a positive month with the portfolio generating a net gain of 6.57%.

I am playing things relatively safe for now. I just entered into a merger arb play in Planet Payment, Inc. (Ticker: PLPM), which is being acquired by Fintrax Group for $4.50 in cash via a tender offer. This deal requires only a tender by the majority of shareholders. Management has already agreed to tender their shares representing 28% of the outstanding shares. The tender offer is expected to expire on 12/18. I was able to pick up a few shares of Planet Payment at $4.47 (~ 10% position), which will hopefully result in a net gain of 0.67% (~ 4.64% annualized return, assuming cash hits my account by 12/22).

Just trying to maintain the gains through the end of the year...

2017 Performance Year to Date = +42.51% with the running monthly returns as follows:

January -4.50%
February +10.18%
March +5.1%
April +4.34%
May +5.67%
June +1.34%
July + 2.76%
August + 4.81%
September + 0.48%
October + 6.57%

13 Comments:

At November 05, 2017, Anonymous Anonymous said...

MT,

Good job for the month of October. Glad to see OCT for your best month of the year. Its a little hard to learn how well (%) you did with KITE Puts mixed in with long positions. Thanks to you I have now been using naked Puts for selected arb plays (ie. KITE, ALR, BRCD) and reaped good simple / annualized profits. We respect your cautiousness as it is your capital at risk. Good M&A arb plays have slowed down some so we need to work harder to uncover any opportunities that may exist. Then of course the rumored pre announcement teasers present themselves recently. CVS v AET, EMR v ROK and AVGO v QCOM. Need to be right, quick and nimble with these plays which means more focused work. We are also looking for clues to see if PFE goes after BMY. The Trump tax cuts for corporate down to 20% and repatriation rate of 12 percent for cash and 5 percent for non-cash should move PFE to do some big deal. The tax bill has to pass both houses and be signed by the President to be certain.

Do you have any thoughts on a potential PFE v BMY deal?


Regards,

Inforesource7

 
At November 06, 2017, Blogger Money Turtle said...

The KITE short Puts contributed to ~ 12% of my gains for October. Regarding PFE going after BMY, I would place a very low probability of a deal, but you never know in this environment. Large pharma deals have generally been a failure and have not created much if any value for the acquirer.

 
At November 06, 2017, Anonymous Anonymous said...

As a former AGN shareholder, Mega mergers are usually crap

 
At November 06, 2017, Anonymous Anonymous said...

Anonymous,

Where have you been? To be honest I am really only interested in capturing any
pre-announcement stock price activity versus the long drawn out approval and closing process. I realize there is more stock price risk as it is pure speculation up until a definitive merger agreement is actually signed. We have to find something to break up the boredom.


Regards,

Inforesource7

 
At November 06, 2017, Blogger Money Turtle said...

I’ve dialed down my risk level quite a bit and just waiting for another KITE type of deal to show up. No need to force yourself into any trades. Merger Pie did some great work on BRCD, which I did not participate.

 
At November 07, 2017, Anonymous mergerpie said...

thanks!..there is just a bit of jittery over the trade due to the broadcom bid on qualcomm...

 
At November 08, 2017, Anonymous Anonymous said...

I'm in MGI suffering.

By the way, why NXTM spread is so hight compared to AKRX for example? the acquirer is always Frenesius german group. Could you analyze those AKRX and NXTM deals? NXTM look really attractive.

 
At November 08, 2017, Blogger Money Turtle said...

I haven't followed NXTM.

AKRX: Jitters on declining biz / fundamentals. I believe the deal gets done. You can't get out of a deal just because the fundamentals of the biz has deteriorated. A declining biz fundamental does not constitute a Material Adverse Event. The acquirer may have buyers remorse, but they are legally stuck to the deal.

 
At November 08, 2017, Anonymous mergerpie said...

cautious regarding MGI... regulatory climate is changing... first with CFIUS increasing scrutiny and now DOJ giving TXW and T a really hard time... i m down on my TWX bet..

 
At November 08, 2017, Anonymous mergerpie said...

i should have listened to myself but i was swayed by news media and other investors tat TWX is a shoo-in..

 
At November 09, 2017, Anonymous Anonymous said...

MT
Thanks for the BABA trade. I was never really convinced in buying it after reading the history of BABA. BUT since you own it for some time I decided to trade some during august and septembber. Somehow IBKR got allocation of SOGOU.com ipo and the only requirement to get the IPO was if you traded Chinese ADR's past 3 months. They just allocated me some shares. Just wanted to thank you for the added bonus for BABA trade. I don't own BABA anymore. hopefully i am able to flip for a decent profit.

Also you usued to own quite a few biotech stocks earlier now, can you explain why you dont own any now except SNY?

Aapltrader

 
At November 12, 2017, Blogger Money Turtle said...

I've cut back on biotechs / pharmas as the macro environment for industry has changed. There are pricing pressures and the regulatory environment has not really improved. The regulatory agency (FDA) makes it very difficult for companies to bring novel therapies to market. It's a tough sector to invest in right now.

I do have a small holding in Sanofi. I just see it as a long term value play. I like their acquisition of Genzyme a few years back and their stake in Regeneron.

 
At November 19, 2017, Anonymous Anonymous said...

All,

Since there have been numerous pre deal (rumor/speculation) opportunities knocking at my brokerage account recently, I have been racking my brain as to how I could profit before any post deal arbitrage sets in. Here are the rumor/speculation targets of my interest hanging out there and my quick thoughts for each.

1) AET by CVS very disruptive (in a good sense) deal idea to combat AMZN and Trump admin. CVS apparently my have offered $200. AET wants a little more and also a stock and cash mix which CVS has agreed to. Both are working to complete a deal by December (end of year or sooner).
AET Intrinsic value is between $206 and $213. If the deal price comes in at or just below these numbers your bet will be safe. Since current stock price of $173 is between $160 and $200 consider playing either a Dec or Jan $175 straddle (buy both sides). This is a heads or tails play and with a straddle you are covered on up or down side.

2) CAVM by MRVL this deal was leaked shortly after AVGO interest in QCOM was announced. Everyone followed the QCOM shing object here. I read both were in advanced talks and thought a potential deal could be announced later in November. This deal is related to what AVGO is trying to do, get stronger. I focused on a CAVM deal at a tad over $80 by playing Call debit diagonal spreads; buy Dec $70 calls, sell Nov $80 calls. November calls expired on Friday, WSJ / reuters reporting pending deal in Sunday evening (11-19) news surprise for $80+ deal coming Monday. Yahoo !!

3) QCOM by AVGO this is complicated by unfriendly AVGO move and pending QCOM NXPI deal flux. This is a real corporate chess match I will just watch this event from the sides lines as I am playing NXPI for a $120 to $125 price bump by QCOM to complete the tender offer. Unless you are very fast trader its tough to determine how to play the QCOM / AVGO volatility.

4) MAT by HAS may end up with a deal here but at what price? MAT has been porrly managed and HAS has been managed very well. Seems like a good match. I am not worried about anti trust issues for toys. No news leak on potential price is a negative.
MAT intrinsic value is $7.50 and is currently way over valued at $18.68. Any play here is high risk due to over value. only HAS knows true value. I am a watcher here.

5) FOXA partial asset sale This was leaked by FOXA in order to bring in all of the interested players, drive up the FOXA value and only involves selling off some assets. Very hard to determine what the impact to FOXA stock price would be after current stock price move up. I am a watcher here.

6) TIME by MDP MDP has solicited the backing of the Koch Bros for an offer of between $17 to $20. If I am not mistaken this is the third attempt at a TIME corporate sale. Did the low depressed stock price finally knock some sense into TIME management to do a deal with MRD?
TIME intrinsic value if between $19.80 and $21.32. TIME current stock price is $16.40. So at current elevated stock price TIME is still under valued and MDP is motivated and has courage with KOCH backing. Considering playing a cluster (many) Dec or Jan call debit spreads $15 / 17.50 or higher if stock price moves up more. MDP was in deal talks with TIME in the past so you have to think alot of diue diligence has already been done except agreement on price. Three times is a charm. TIME do the deal with MDP.

What do you all think? Lets discuss and fire up this blog with some activity, ideas, healthy debate on how to make some money off of any of these events before they are officially announced !!


Regards,

Inforesource7

 

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