Money Turtle

More Inhibitex

2012-01-11T10:34:00.003-05:00

I sold my remaining holding in Pharmasset, Inc. (Ticker: VRUS) today and used a portion of the proceeds to pick up more shares in Inhibitex, Inc. (Ticker: INHX) at ~ $24 per share.

It’s been a wild ride in 2011 as I got hit quite badly with the special situation plays in Big Lots (Ticker: BIG) and Gen-Probe (Ticker: GPRO). I went in pretty big in those positions and got killed when there were no deals. That was definitely an unpleasant learning experience… I placed a too big of a wager on an uncertain situation. Fortunately, I managed to dig myself out of the hole and basically ended flat for the year. It would have been a great year if it wasn’t for those two big losers. Going over my trades, ~ 71% were profitable. I would like to maintain this goal going forward. You are never going to be 100% profitable on your trades. The end game is simply to make money.

Some Inhibitex, Inc.

2012-01-10T08:55:00.006-05:00

I sold half my position in Pharmasset, Inc. (Ticker: VRUS) yesterday generating a net gain of 5.5% over a 35 day period (~56% annualized return). I reinvested the proceeds into Inhibitex, Inc. (Ticker: INHX) at ~ $23.76. Inhibitex announced over the weekend that it has agreed to be acquired by Bristol-Myers Squibb (Ticker: BMY) for $26 in cash via a tender offer. I’m looking at this deal closing in ~ 60 days. The spread is attractive (currently ~ 9% with a potential annualized return of ~ 55%) because people still remember what happened to Pharmasset when they stopped a phase two trial for hepatitis C due to liver toxicity. I like this risk return opportunity…

On a side note, I picked up an odd lot (99 shares) of SeaSpan Corporation (Ticker: SSW) at $13.51 and tendered the shares yesterday. There is a tender offer for $15 per share with holders of odd lots taking priority. No gain is too small…Thanks to T. Bhat at http://valueinvesting.proboards.com (click: here) for giving me the heads up on this deal.

Pharmasset, Inc. Is Almost Done

2012-01-07T08:34:00.005-05:00

Yesterday, Gilead Sciences, Inc. (Ticker: GILD) announced that it received HSR approval for the acquisition of Pharmasset, Inc. (Ticker: VRUS). Pharmasset popped to ~ $135 in after hours trading. This deal is just about done with the tender offer expiring next week. The closing of this deal will be a nice start to the New Year.

Year End Adjustments and Pharmasset

2011-12-23T11:32:00.007-05:00

As the year end approaches, it’s time to trim the weeds. I’ve been selling positions that I have losses to offset the gains for the year. It’s also a good strategy as it forces me to dump the laggards and prepare for a fresh start to the New Year.

Right now, I just have just one arb position and that is in Pharmasset Inc. (Ticker: VRUS), which is in the process of being acquired by Gilead for $137.00 per share in cash via a tender offer. The spread remains large as the market was spooked by high liver toxicity results in a phase two trial for PSI-938 for hepatitis C, which resulted in a halt to the clinical trial for PSI-938. This does not in anyway affect the merger agreement as Gilead is purchasing Pharmasset for their lead hepatitis C drug, PSI-7977. The clinical data for PSI-7977 has been clean, but the market as always over reacts.

The next market moving news for Pharmasset will be the HSR approval from the FTC. According to the proxy statement, Gilead filed for HSR approval on or prior December 15th, which means that they should know by December 30th. I would expect a press release on the HSR status in early January since they are unlikely to do anything much over the weekend / holiday.

Receiving HSR approval (early termination of review) is a must for a January closing. I do not for see any anti-trust issues. The hepatitis C market is very competitive right now with several major players such as Merck (Ticker: MRK), Vertex (Ticker: VRTX), Roche (Ticker: RHHBY), etc…. Gilead wants this deal done as fast as possible based on their tender offer route. I have a strong conviction on this merger arb play and see this as a very good risk / reward opportunity.

Got Some Zynga, but...

2011-12-16T12:14:00.002-05:00

It looks like the Zynga (Ticker: ZNGA) IPO turned into a dud. I was allocated a few shares, but the stock quickly dropped below its offering price of $10 per share. I sold my shares in Zynga at $10. My initial plan was to flip it for a quick profit, but that plan quickly changed. The valuation in Zynga is just too high for this market environment.

Sold Goodrich and More Pharmasset

2011-12-09T11:52:00.003-05:00

I sold my position in Goodrich Corporation (Ticker: GR) today at $122.73 generating a net gain of 12.91% (~58% annualized return). I was hoping to sell this position next year to minimize my capital gains tax, but I saw an opportunity in Pharmasset, Inc. (Ticker: VRUS) that I couldn’t pass up. Goodrich was a nice special situations play. I used the proceeds from Goodrich to purchase more Pharmasset at $129.15. As they say in poker, I’m “All In” on Pharmasset.

On a side note, I put in an indication of interest for some shares in Zynga, which is expected to price next week. There’s no doubt that this will be a hot IPO. I’ll probably flip it if I’m allocated shares.

Sold Global Education & Technology Group

2011-12-06T13:29:00.003-05:00

I took my profits in Global Education & Technology Group Limited (Ticker: GEDU) today at $10.86 generating a net gain of 3% over a 16 day period (67.5% annualized return). This was a nice merger arb play as it presented a quick closing time frame. I saw a more compelling opportunity in Pharmasset Inc. (Ticker: VRUS), which is being acquired by Gilead Sciences (Ticker: GILD) for $137 per share in cash. Bloomberg had a nice write up on this merger arb play regarding the wide spread in Pharmasset (Click: here). I picked up a chunk of shares at $128 and change. I’m looking at a potential 6.2% gain over a 3 month period (~20% annualized return). Some are projecting a relatively quick closing as in January. I like this risk return opportunity…

Bought Some Global Education & Technology Group

2011-11-22T15:43:00.004-05:00

The China plays have been good to me so far. I picked up a few shares of Global Education & Technology Group Limited (Ticker: GEDU) yesterday at $10.54. This company is being acquired by Pearson PLC (the publisher of the Financial Times) for $11.006 per share. Normally I would not look too much into a deal like this because a deal usually takes 3 months or so to close if everything goes well. I decided to read the press release for the fun of it and the thing that caught my eye was that they expect to close this deal before the end of the fourth quarter of this year. Now this starts getting interesting and I ran some quick numbers and this looks like a decent merger arb play. I'm looking at generating a total return of 3.95% (34.68% annualized return assuming a closing date of 12/31/11) with a purchase price of $10.54. I’ll take this kind of return anytime…

Harbin Electric = Done Deal

2011-11-01T20:46:00.006-05:00

Harbin Electric, Inc. (Ticker: HRBN) announced after the bell today that the closing of the management buyout for $24.00 in cash per share will occur on November 2nd and the stock will be delisted. The cash pay out will occur shortly thereafter. I actually picked up a few more shares today at $23.37 and $23.51, which equates to a quick 2.3% gain. I'm starting to like these China management buyouts as there are lots of skepticism surrounding them, which allows for a nice fat arb spread. I'm keeping my eyes on a few more China plays and hoping to add / initiate positions in them soon.

Closed Out China Fire & Security Group

2011-10-27T15:43:00.008-05:00

I closed out my position in China Fire & Security Group (Ticker: CFSG) yesterday generating a return of 3.25% over a 3 month period (annualized return of 12.72%). I started building a position in this stock in June when it was $7.81 and subsequently added more as the deal neared closing. I sold because I thought the deal would have closed by now and there was better risk arb opportunities out there. I continued to add to Harbin Electric (Ticker: HRBN) as this deal nears completion.

On a side note, I’ve also been dabbling in some silver coins and the 2011 American Eagle 25th Anniversary Silver Coin Set from the US Mint (click: here) is harder to get than the hottest IPO. The US Mint started selling this con set online today and the demand for this coin set basically crashed their web site. I’ve just about given up trying to get this…

Edit:

100,000 of these coin sets ($299.95 per set) were sold out in 4.5 hours. Here's a picture of the coin set.

99 Cents Only Stores = Done Deal

2011-10-11T10:47:00.005-05:00

It looks like the New York Post got another one right… They were on the money with the BJ’s Wholesale Club call. Today, 99 Cents Only Stores (Ticker: NDN) agreed to a buyout from Ares Management and the Schiffer-Gold family for $22 in cash. I sold my holdings in 99 Cents Only Stores today at $21.38 generating an 8.19% (491% annualized) return over a 6 day period.

I took a stab at Harbin Electric, Inc. (Ticker: HRBN) today at $21.07. I’ve been trading in and out of this one for the past month. The shorts are all over it, but everything appears to be going as planned for the management buyout for $24 in cash. I try to avoid all of the noise out there from the shorts and just focus on the SEC filings. I believe that there’s a good chance that this one will close.

Some 99 Cents Only Stores

2011-10-06T16:11:00.005-05:00

It looks like the end game is near for 99 Cents Only Stores (Ticker: NDN). The New York Post is reporting that Ares Capital is close to placing a bid for 99 Cents Only Store. The Post is certainly not the best source for M&A news, but they seem to have an inside scoop on this one. Ares Capital will be competing with Leonard Green & Partners for this company. I picked up a few shares today at $19.76.

Harleysville = Done Deal

2011-09-29T08:27:00.001-05:00

At first I thought it must have been a typo when I saw the following headline: “Nationwide will pay $60 a share in cash for Harleysville (Ticker: HGIC)”. I was looking for $35 and at most $40, but $60… You rarely see this kind of premium after news has leaked of a potential merger. This is what you call a home run; no make that a grand slam! Wow…

Some Harleysville Group, Inc.

2011-09-23T14:37:00.001-05:00

I just initiated a position in Harleysville Group, Inc. (Ticker: HGIC), a personal auto insurance company, at $29.88. Bloomberg is reporting that the company is in merger discussions with Nationwide Mutual Insurance Co. It sounds like a deal will materialize soon. We’ll see…

Some More China Fire & Security Group, Inc.

2011-09-22T14:57:00.001-05:00

I added to my position in China Fire & Security Group, Inc. (Ticker: CFSG) today at $8.75. The company should be releasing the results of the shareholder vote today. I really doubt that they did not get enough votes to approve the merger or else they would have postponed the meeting. If the shareholders approve the merger, the company will complete the management buyout with Bain Capital for $9.00 per share in cash.

Goodrich Corp. = Done Deal???

2011-09-21T20:53:00.004-05:00

Wow, Bloomberg is reporting that Goodrich Corp. (Ticker: GR) has agreed to be acquired by United Technologies Corp. (Ticker: UTX) for $127.50 in cash. This was much more than I had hoped for as I was just looking for something in the range of $115 or so. I loaded up on more Goodrich today at $110.38 with an average price of $108.67, which equates to a potential return of 17%. I was planning on purchasing more tomorrow with the expected cash proceeds from a recently completed merger, but this news kind of changes things. Can't get too greedy...

Some Goodrich Corporation

2011-09-20T15:19:00.002-05:00

I initiated a position in Goodrich Corporation (Ticker: GR) today at $105.77. Of course the rumor floating around is that United Technologies Corporation (Ticker: UTX) is interested in pursuing a buyout of Goodrich Corporation. I guess we’ll see sometime this week if a deal materializes. Based on all the chatter out there, I believe there’s a good chance of a deal.

Closed Out Varian Semiconductor Equipment Associates, Inc

2011-09-16T14:00:00.003-05:00

I sold out of my remaining Varian Semiconductor Equipment Associates, Inc. (Ticker: VSEA) position today at an average price of $61.82. I sold some earlier in the week as well. I needed to free up some cash to play China Fire & Security Group, Inc. (Ticker: CFSG) and China Security & Surveillance Technology, Inc. (Ticker: CSR). The Varian Semiconductor Equipment Associates merger arb play generated an ok return of 1.46% over a 47 day period (11% annualized). Not great, but still ok… I just saw greater opportunities in both of the China merger plays. I may get back into Varian Semiconductor Equipment Associates as the stock will likely stay below $62.00 until they receive word from the U.S. DOJ and China’s MOFCOM sometime in October.

China Security & Surveillance Technology = DONE DEAL

2011-09-16T12:39:00.003-05:00

China Security & Surveillance Technology, Inc. (Ticker: CSR) stock was delisted from the NYSE today and shareholders will receive the funds ($6.50 per share) shortly. I don’t know if they are going to impose a $0.05 per share ADR fee as they do sometimes with foreign securities. In any case this was a successful merger arb play. Assuming a worse case scenario in which an ADR fee of $0.05 per share is imposed, I’ll be generating a total return of 4.17% over an eleven day period (136% annualized) and if there’s no ADR fee, my total return will be 4.91% (160% annualized).

Edit: I was informed that this is not an ADR so there will not be a $0.05 per share ADR fee.

China Security & Surveillance Technology Receives Shareholder Approval

2011-09-14T15:30:00.004-05:00

China Security & Surveillance Technology, Inc. (Ticker: CSR) received shareholder approval today for the management buyout offer for $6.50 in cash. The company stated that they intend to close the deal in September, which means they should close in the next few days. This was a nice merger arb play as there was lots of skepticism that the company would be able to complete the deal. If you ignore the noise from the short sellers and just read the SEC filings, you'll see that this was a fairly straight forward merger play. So I’m looking at ~ 4% return for ~ 2 week holding period (~62% annualized return assuming a September 30 close). So we’re almost there…

China Security & Surveillance Technology Merger Arb Play

2011-09-10T20:09:00.009-05:00

There are lots of opportunities in the risk arb space right now due to a variety of factors ranging from the increase cost of debt financing to distrust in China companies. I’m currently focusing on some China management buyout plays with positions in China Security & Surveillance Technology, Inc. (Ticker: CSR) and China Fire & Security Group, Inc. (Ticker: CFSG). I got into China Fire & Security Group in June at ~ $7.80 and it looks like it is on target to close by the end of this month with a buyout price of $9.00. I just started building a position in China Security & Surveillance Technology with prices ranging from $6.14 to $6.20. The shareholder vote for China Security & Surveillance Technology is scheduled to take place on September 14th and the deal should close shortly after with a buyout price of $6.50. I'm looking at initiating some new positions with other China management buyouts, but I want to wait until these two deals close.

Anticipated Closing in October for Varian Semiconductor Equipment Associates

2011-08-25T06:46:00.008-05:00

It looks like everything is on track for an October closing with the acquisition of Varian Semiconductor Equipment Associates, Inc. (Ticker: VSEA) by Applied Materials, Inc. (Ticker: AMAT). Applied Materials made the following comments regarding the merger in yesterday’s earnings conference call. Here’s what they said:

“…Over the past 3 months, we've taken a number of important steps towards completing the Varian acquisition. On August 11, Varian shareholders voted to approve the merger, and to date, we have received regulatory clearance from Israel, Germany and Taiwan. We're still awaiting approvals from the U.S. and China. We're committed to closing the transaction, which we now expect to occur in October. We are excited about the opportunities that we will deliver to our customers, shareholders and employees by combining the strengths of these 2 companies.

Cash and investments ended the quarter at $6.8 billion, up $2.2 billion from the second quarter, including the debt proceeds. The elevated level of cash is reflective of our all-cash offer for Varian. We regularly review our capital structure, relative to our capital allocation principles of ensuring a strong investment-grade balance sheet that allows us to fund disciplined investments in the growth of our business while supporting dividend growth, in line with business performance, and use of share repurchase as the preferred means of returning excess cash to shareholders….”

They just need the regulatory OK from U.S. & China and have the cash on hand to pay for the deal. I’m tempted to add to this position as the annualized return is still attractive.

Some RPC Inc

2011-08-23T15:26:00.003-05:00

We just had a small tremor here in the northeast. I thought my coworker was shaking the cube and was getting annoyed when I finally realized it was an earthquake. I like this reaction from traders on the NYSE: “Shortly after the quake struck, traders in the New York Stock Exchange also felt the quake and shouted to each other, "Keep trading!" CNN's business correspondent Alison Kosik reported from the floor at 2:20 p.m. E.T.” Money does not stop…

I was trading in and out of RPC Inc (Ticker: RES) these past few days. I’m going to hang on my position that I bought at $22.12. This company specializes in “fracking”, which is a process used to extract natural gas from shale formation. This is a cyclical company, but currently has a nice back log. The company has also exploring the possibility of selling itself and has hired Goldman Sachs to explore this option. I like this risk reward opportunity.

Back In Kinetic Concepts and Some Pharmaceutical Product Development

2011-08-16T15:17:00.004-05:00

I’ve jumped back into Kinetic Concepts (Ticker: KCI) today at an average price of $68.05. As you may know, this company has agreed to be acquired by Apax Partners for ~ $5 billion or $68.50 in cash. Today, Bloomberg reported that Bain Capital and Avista Capital Partners are trying to put an offer together that tops Apax Partners. We’ll likely hear soon if we get a higher offer as Kinetic Concept’s “go shop” period expires next week. The big question for Bain and Avista is obtaining favorable debt financing, which I think is doable.

I also picked up some Pharmaceutical Product Development, Inc. (Ticker: PPDI) at $32.50. This company has announced that it is exploring strategic alternatives. Bloomberg reported that the Carlyle Group is in exclusive negotiations with the company.

In terms of my other risk arb plays, I’m still holding China Fire and Security Group, Inc. (Ticker: CFSG) and Varian Semiconductor Equipment Associates, Inc. (Ticker: VSEA). I expect both of these will close by early to mid Q4.

Sold Blackboard

2011-08-05T15:05:00.004-05:00

I sold my Blackboard (Ticker: BBBB) position this morning at $42.59 generating a gain of 0.40% over a two day period. This was basically a break even trade. I wanted to raise some cash for some potential opportunities. It's probably a bit too soon to do any serious buying. There's a lot of technical damage out there and will take some time to repair. Patience is key right now...

Some Blackboard

2011-08-04T15:47:00.003-05:00

Ouch… What just happened??? You don’t want to be catching a falling knife on a day like this. I was focusing on some risk arb opportunities. I picked up some Blackboard (Ticker: BBBB) today at $42.42. This company has already agreed to be acquired by Providence Equity Partners for $45 in cash. This is a ~ 6% return (~ 20% annualized return assuming a mid November closing). The probability of this deal falling apart is small. The stock simply sold off because people needed liquidity. Institutions just sold blindly. Not a very efficient market with many of the deal stocks today.

Varian Semiconductor Equipment Associates (risk arb play)

2011-08-02T20:15:00.001-05:00

I thought I would take a break from the risk arb plays after the closing of L-1 Identity Solutions since there wasn’t much going on. I did some screens and Varian Semiconductor Equipment Associates Inc. (Ticker: VSEA) popped up. They are being acquired by Applied Materials (Ticker: AMAT) for $63 in cash. The deal was announced on May 4th and is currently awaiting regulatory approval from several countries (still waiting decisions from US, China and South Korea). I picked up a few shares yesterday at $60.93 and looking for this deal to close at the end of September (3.4% return, which equates to an annualized gain of ~ 20%). The spread has started to widen a bit due to some perceived risk. I don’t see any major regulatory hurdles with this deal. From what I’ve read, there is a small overlap in some high-end ion equipment between these two companies, but this overlap is tiny and is not big enough to block the deal. The timing in the closing of the deal will be based on the decision from MOFCOM (China’s Ministry of Commerce). I’ve seen analysts factor in a 5-month review by MOFCOM. There is also a second request for additional info from the US DOJ. Just something to keep an eye on…

Got Some C&J Energy Services

2011-07-29T10:29:00.003-05:00

I was not allocated in any shares of Teavana (Ticker: TEA), but to my surprise I managed to get a few shares in C&J Energy Services (Ticker: CJES). C&J Energy Services did not exhibit a huge opening day pop as it was priced at $29 (above the initial pricing range of $25-28). The last I checked, the stock was trading around $31. So no complaints… I plan on holding this one as it presents a nice growth story on the fracking boom in the discovery of hard to find natural gas.

I want to aggressively add to Dunkin’ Brands (Ticker: DNKN), but at the right price. I still have a relatively small position as I added a little bit more yesterday at $28.91. I’m going to just watch and wait for a pullback before adding any more.

Bought Some: Google, Priceline and Dunkin' Brands

2011-07-27T15:48:00.003-05:00

I did a little bit of buying today. I was waiting for a pull back to start initiating some positions. I picked up some Google (Ticker: GOOG) at $606.87, Priceline (Ticker: PCLN) at $517.41 and Dunkin' Brands (Ticker: DNKN) at $27.13. These are small positions and I’ll just see how they play out. I do plan on adding to Dunkin' Brands on any pullback.

I’m also trying to get a few shares of Teavana Holdings (Ticker: TEA) and C&J Energy Services (Ticker: CJES). I should know soon if I’m allocated any shares in these IPOs.

On a side note, talk about being left at the altar… Fundtech (Ticker: FNDT) was in the process of merging with S1 Corporation (Ticker: SONE), when ACI Worldwide (Ticker: ACIW) swooped in and made a hostile bid for S1. This will leave Fundtech without a partner. I was lucky to get out of Fundtech when they announced the merger with S1. You never know with these M&A plays…

Ok, enough of my rambling...

L-1 Identity Solutions = Done Deal

2011-07-19T08:49:00.001-05:00

L-1 Identity Solutions (Ticker: ID) finally received the CFIUS approval to close the transaction with Safran SA, the French defense company. I started buying from 6/8 to 6/30 with purchase prices ranging from $11.36 to $11.80. My average price is $11.48 generating a net gain of 4.52% (~39% annualized return). You had to be patient with this one as the CFIUS process can drag out forever as in this case. This was also heavily shorted as many bet that CFIUS was not going to approve this deal. I had a strong conviction on this one, but it definitely wasn’t easy to hold to the very end.

Kinetic Concepts, Inc. = Done Deal

2011-07-13T07:04:00.003-05:00

Last week I took a small position in Kinetic Concepts, Inc. (Ticker: KCI) at $65.80. At that time, there were reports that the company was in exclusive talks with two private equity firms. One of the names floated around at that time was Blackstone. Today, the company announced that it agreed to a deal with Apax Partners and two Canadian pension funds to take the company private for $68.50. This is a potential return of 4.1% over an 8 day period (184.5% annualized). I wasn’t as aggressive in this one as the high yield debt market was starting to close, which could have nixed the deal. I’m getting a bit more cautious on any private equity plays.

Edit:

I sold my position in Kinetic Concepts this morning at $68.02 generating a 3.37% gain (151.6% annualized).

Blackboard, Inc. = Done Deal

2011-07-01T09:16:00.005-05:00

I sold my Blackboard, Inc. (Ticker: BBBB) position today at $44.14 generating a net gain of ~0.80% over a 7 day period (annualized return of 36%). This wasn’t a great special situations play as the buyout from Providence Equity Partners came in on the low side. I was looking for something in the high 40s. It’s time to move on to look for better uses for my $$$...

I'm also back in Apple, Inc. (Ticker: AAPL) at $335.50. I got shaken out last time and I was wrong to sell.

Some More Blackboard and L-1 Identity Solutions

2011-06-30T20:10:00.004-05:00

I should have held onto my BJ’s Wholesale, Inc. (Ticker: BJ) position just a tad longer, but you just have to evaluate the risk and reward. I wasn’t comfortable with the potential upside of just a few dollars versus a substantial drop in the stock if there was no deal. In any case, you learn and move on…

Today, I added to my Blackboard, Inc. (Ticker: BBBB) position at $43.43. After the close today, Reuters is reporting that Providence Equity Partners is close to acquiring Blackboard and may announce the deal tomorrow morning. Now the big question is what price? I would be surprised if the price was over $50. I guess we’ll see tomorrow morning…

I also added to my position in L-1 Identity Solutions, Inc. (Ticker: ID) at $11.76. I’m looking at this deal to close around July 18th. Safran SA is acquiring the company for $12.00 in cash. The company is currently working on a mitigation agreement with CFIUS, which is holding up the closing of this transaction. There's always a chance that CFIUS blocks this transaction, but I see this as a very low probability.

Fundtech = Done Deal

2011-06-27T10:18:00.001-05:00

Ok, finally have a deal play that worked out… Today, S1 Corporation (Ticker: SONE) announced that they will be acquiring Fundtech (Ticker: FNDT) for 2.27 shares of S1 Corporation for each share of Fundtech. I sold all my Fundtech shares today at $20.42 and $20.44 generating a net gain of 3.27% over an 8 day period (annualized return of 147.15%). I was looking for a higher takeout price, but I’ll take it…

BJ, CFSG and BBBB

2011-06-24T09:48:00.002-05:00

I sold BJ’s Wholesale (Ticker: BJ) today at $48.31 and basically broke even (cost basis was $48.24) on the trade. When I entered the trade, I was anticipating a takeout price in the mid 50’s and obviously this is no longer the case. There’s a good chance that BJ’s Wholesale says: “Thanks, but No Thanks”.

I started building a position in China Fire & Security Group (Ticker: CFSG) at ~ $7.80. This is a China based company involved in a management buyout. Bain Capital is involved in this deal. There’s a nice spread (~ 15%) as the buyout price is $9.00. I see a good chance of this deal closing.

I also picked up some Blackboard, Inc (Ticker: BBBB) today at $43.95. The Wall Street Journal is reporting that Providence Equity Partners is in exclusive talks with the company and a potential deal could happen shortly.

Sold Apple and More Fundtech

2011-06-21T15:51:00.003-05:00

I sold Apple (Ticker: AAPL) today at $315.73… Near the low of the day! I started to worry because the stock was starting the break down and was looking awful on a technical basis. I’m still walking away with a small profit, but I’ll probably be kicking myself for selling.

I added a bit more to Fundtech Ltd (Ticker: FNDT) today at $19.71. This company is in the sweet spot right now as the major banks are transitioning to their software for various transactions. The share price is reasonably priced even if there is no buyout. The odds are high that something will happen.

Level-1 Identity & Some Fundtech

2011-06-20T15:49:00.003-05:00

Level-1 Identity Solutions, Inc. (Ticker: ID) performed nicely today, gaining 3.87%, after the release of the 8-K stating that they expect to close the deal with Safran SA within 30 days and they are making progress with CFIUS. I have a good position in Level-1 Identity and believe that there is a high probability of this deal closing within 30 days.

I also initiated a small position in Fundtech Ltd (Ticker: FNDT) today at $19.80. The company is currently in preliminary discussions regarding a merger. The company’s largest shareholder wants to sell. Analysts have floated a price around $25. We’ll see…

A Position in BJ's Wholesale Club

2011-06-14T15:39:00.002-05:00

I picked up a few shares of BJ’s Wholesale Club (Ticker: BJ) today at $48.53. We should be hearing soon regarding the bid from Leonard Green and CVC Capital Partners. This news has been floating around awhile, but it’ll be interesting to see what the actual bid is. $2.8 billion has been floated around from a report from the New York Post. Believe me, when I see an M&A story from the New York Post, I take it with a small grain of salt. But in this case, they have been right on… We’ll soon see how this ends up.

I’m currently doing some more digging on some new M&A plays. Just looking at a good price to pick them up…

L-1 Identity Solutions

2011-06-10T14:51:00.004-05:00

It hasn’t been fun lately with the busted deals in Big Lots (Ticker: BIG). and Gen-Probe (Ticker: GPRO). I cut my losses in both of those positions. I kind of drifted to a more aggressive style with some event driven positions. Hey, I simply got too greedy and paid the price… It’s obviously safer to focus on announced deals and just play the spread until the deal closes.

I’ve been keeping a close eye on L-1 Identity Solutions (Ticker: ID), which is being acquired by Safran, the French defense company. The closing of the deal has been delayed several times due to the CFIUS review process. It’s currently in the 45 day extended review period and I believe the probability is very high that CFIUS will approve this merger. The spread right now is ~ 5.5%, which isn’t bad if the company receives approval by July 18th (the expiration date of the 45 day review period). I’ve actually had very good luck with defense type companies tied up with the CFIUS review process. I initiated a position at $11.35.

I did some digging and here’s a nice little write up from: TheDeal Magazine, Risk arbitrage: June 13, 2011

L-1 Identity Solutions Inc.
Safran SA
Deal value $1.1 billion
Spread 06/06/11 85 cents, or 7.6

The $1.1 billion merger of L-1 Identity Solutions Inc. with Safran SA of France is mired in an extended review by the U.S. government, but the deal will probably be cleared.

L-1 and Safran are now under a review scheduled to expire July 18. This period, for a 45-day national-security probe, could be brought to an earlier close by execution of a definitive mitigation agreement if the parties come together.

L-1 continues to believe that progress is being made toward reaching a definitive mitigation agreement satisfactory to all parties as soon as practicable, although there is no assurance this will occur.

The Committee on Foreign Investment in the United States oversees the security implications of deals involving U.S. assets being purchased by foreign entities.

The process is an initial 30 days followed by a potential 45-day extended review. Safran has refiled repeatedly to stave off the extended review. L-1 has previously said the parties have made meaningful progress with the review and are working on a mitigation agreement, with a resolution likely by mid-June.

Allowing the review to move forward is a sign that the parties are close to a resolution.

L-1 provides identity security services including fingerprinting, iris identification technology and credential production; 90% of L-1's business is government related, and its credentials business includes contracts for 80% of driver's license production in the U.S. and contracts for the manufacturing of U.S. passports.

CFIUS has been looking at how sensitive information regarding this documentation will be protected.

My Take on Gen-Probe

2011-06-07T20:14:00.002-05:00

The auction for Gen-Probe has ended and everyone knows that Novartis is the only bidder left after Thermo Fisher and Life Technologies dropped out. I never thought Thermo Fisher was serious in this bidding after their purchase of Phadia, but I thought that Life Technologies was going to make a serious run for Gen-Probe. Life Technologies is in a relatively slow growing mature business and needs to grow their earnings at a faster clip. The Gen-Probe acquisition could have provided a nice fast growing business for them. People are now speculating that Novartis will simply just walk away. I don’t think they will… Of course if you are the only bidder, you don’t want to bid against yourself, but they understand the Gen-Probe business very well. This is an opportune time to acquire Gen-Probe as the company is about to transition into a new product cycle and should see a nice boost in earnings in the coming years. I’ve seen reports of 18% eps growth for 2012 and 20% thereafter. I can see an offer up to $85 for Gen-Probe and I would consider that a bargain for the acquirer. I guess we’ll see soon…

Big Lots and Gen-Probe

2011-05-16T19:58:00.006-05:00

Hello… Hello… Yes, I’m still around. I still hold a position in Big Lots (Ticker: BIG) and initiated a position in Gen-Probe (Ticker: GPRO). There’s a lot of uncertainty now regarding a potential deal in Big Lots. The down side is very limited based on valuation and the market is pretty much pricing in a no deal. A lot of the hedge funds are filing their 13F's with the SEC. It’s interesting to note that Eddie Lampert holds 1.3 million shares in Big Lots. This guy runs a concentrated portfolio and this is 1 of 10 positions in his portfolio. Click here to check out his holdings.

"...firing on all cylinders" from Steve Jobs

2011-04-20T15:47:00.004-05:00

Ok, I think you guys had enough of me talking about Big Lots (Ticker: BIG)... I'll move onto something else...

“With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” Enough said, this was a quote from Steve Jobs on the Apple (Ticker: AAPL) earnings release. Another outstanding quarter… Oh and the company has built its cash position to $65 billion. The number speaks for itself. Wow!

Same Old, Same Old...

2011-04-14T15:58:00.001-05:00

Well, like I mentioned earlier I didn’t get any shares of Zipcar (Ticker: ZIP) and I certainly would not buy any shares at the current price. It has a billion dollar valuation. I would have flipped it if I got any shares. It takes some luck to get IPO shares. It certainly helps if it’s a big offering and of course you have to be a “good” customer (i.e. generate lots of commissions and / or margin interest). I haven’t played the IPO game for a long long time. The last IPO I played was Visa (Ticker: V), which I managed to get some shares.

Ok, back to business… I added to Big Lots (Ticker: BIG) today at prices ranging from $43.15 to $43.22. The stock seems to open up a bit, sell off and buyers step in towards the end of the day. I like this action…

Trying To Get Zipcar

2011-04-13T15:52:00.003-05:00

In the past few days, there has been a bit of M&A chatter on various companies ranging from Exelixis (Ticker: EXEL) to Tyco International (Ticker: TYC). I don’t have positions in either of these companies, but I am keeping a close eye on them. My primary focus is on Big Lots (Ticker: BIG) and we should be hearing soon on the results from the second round bids.

In the mean time, I’m trying to play some IPOs. I placed a conditional offer for a few shares of Zipcar (Ticker: ZIP), but this one will be difficult to get because of the thin float and strong demand. I’ll know tomorrow morning if I’m allocated any shares.

Edit:

I was not able to get my hands on any Zipcar shares. It’s not surprising…

Here We Go Again... More Big Lots

2011-04-06T15:38:00.006-05:00

I finally received the cash and CVR shares from the Genzyme (Ticker: GENZ) / sanofi-aventis (Ticker: SNY) deal. I’m using some of the cash to build my Big Lots (Ticker: BIG) position. I picked up some more Big Lots today at $43.81 and $43.62. I have plenty of ammo now to add to Big Lots on any pull back. We should be hearing some news within the next two weeks in terms of where the potential deal stands. I like the price here based on valuation and the potential take out play.

A Little More Big Lots again...

2011-03-29T15:08:00.004-05:00

We kind of have a clearer picture now of the bidding process for Big Lots (Ticker: BIG). There was an article from the dealReporter stating that the following private equity firms have teamed up to bid for Big Lots: TPG / Bain Capital, Leonard Green / CVC Capital Partners and Thomas H. Lee Partners. The second round bids (usually the final round bids) are due around April 20th. The bidding could get interesting with Goldman Sachs (Ticker: GS) looking at a sale price of 10.5 to 11X EBITA. I can see a possible deal by the end of April. I nibbled on some more Big Lots today at $42.90.

On a side note, the end is near for Genzyme (Ticker: GENZ). I tendered my shares today and it looks like the deal will close next week.

Sold Airgas

2011-03-25T09:07:00.004-05:00

I sold my Airgas (Ticker: ARG) position today at $65.91 generating a big fat ZERO gain. The Airgas position was purchased on 12/8/10 at $65.91 and was a buyout play. This one didn’t work out and fortunately was able to get out ok. Still nothing much happening; I did nibble at some more Big Lots (Ticker: BIG) last week and that’s it for now...

A Little Move in Big Lots

2011-03-11T10:20:00.001-05:00

I’m still in Big Lots (Ticker: BIG) and have a strong conviction on this one. Big Lots moved up nicely this morning because of a DealReporter story. It said that “the company has received interest from a number of prospective buyers.” I like this special situations play as the probability of a deal is high.

I did sell a few shares of Genzyme (Ticker: GENZ) at $75.36 a few weeks back, but I am holding onto the rest until the deal closes. That’s about it for me right now. Nothing exciting… You don’t have to be invested at all times to do well. As in poker, you play your hands when the odds are in your favor.

Bought More Big Lots

2011-02-22T11:18:00.004-05:00

I continued to add to my Big Lots (Ticker: BIG) position today at $41.26 and $41.29. The valuation in Big Lots is very compelling and there’s a potential for a nice premium in a private equity deal. I like the risk reward profile.

Here are my recent purchases in Big Lots:

2/18 Buy 0.5X @ $41.60
2/22 Buy 1.5X @ $41.29
2/22 Buy 0.5X @ $41.26

Sold Some Genzyme and Back in Big Lots

2011-02-18T15:22:00.004-05:00

I sold some of my holdings in Genzyme (Ticker: GENZ) today at $75.36. I sold the 1X and 0.7X lots, which were purchased on 02/14/11 generating a total return of 4.53% over a 5 day period (232.97% annualized). I sold because I wanted to free up some cash so I can get back into Big Lots (Ticker: BIG), which I did today at $41.60. It’s a relatively small position in Big Lots, but I may add over time as cash becomes available. There’s a high probability that Big Lots will be acquired by private equity.

Another reason I sold those particular lots in Genzyme was the fact that the shares were purchased on margin. There was no benefit in holding until the closing as the margin interest would eat up the rest of the potential gains. When you use margin, time is money.

Genzyme = Done Deal

2011-02-16T08:39:00.004-05:00

Well, it’s about time… Genzyme (Ticker: GENZ) has finally agreed to be acquired by Sanofi-Aventis (Ticker: SNY) for $74 in cash plus CVR (the maximum value of the CVR will be $14 in the best case scenario). I’m going to hang on to the shares until closing so I get the CVR’s. It’s been a fun and profitable journey. The game's not over and now it’s time to search for the next big trade…

Airgas = No Deal

2011-02-15T21:56:00.005-05:00

The judge finally issued his ruling in favor of Airgas' (Ticker: ARG) poison pill. Air Products (Ticker: APD) promptly issued a press release stating that they have withdrawn their tender offer of $70 for Airgas. Airgas stock is trading in after hours at ~ $61. I'm not going to close out my Airgas position because I believe Airgas is very vulnerable now. The next shareholder meeting scheduled for September will be very interesting as additional members of the board will be up for re-election. Now, it's the shareholders turn to have a say. It's not over by any means...

Genzyme = Almost Done

2011-02-15T16:40:00.007-05:00

Genzyme (Ticker: GENZ) moved up nicely today with the stock rising 3.53% on reports that the company has agreed to be acquired by Sanofi Aventis (Ticker: SNY) for $74 + CVR. The big question is the potential value of the CVR. We’ll find out in the merger agreement, which could be announced tomorrow morning. This news makes up for the Emergency Medical Services, Corp. (Ticker: EMS) take under in which shareholders were ripped off by the $300 million merger fee.

More Genzyme

2011-02-14T14:54:00.002-05:00

I had to regroup today after the EMS (Ticker: EMS) take under, which totally blindsided me. Anyways, you have to move on to your next trade. I’ve decided to really backup the truck in Genzyme (Ticker: GENZ). We’re very close to a decision and I believe the probability is very high that we’ll have a deal by the end of the week. I already have a decent position in Genzyme so I bought more today. I usually don’t like to average down, but I just thought today’s prices were just too compelling to pass up. Here are my trades in Genzyme today:

Bought 1X @ $72.30
Bought 0.4X @ $72.06
Bought 0.8X @ $71.99
Bought 0.7X @ $71.80

The 13F reports are coming out and many of the big hedge funds have loaded up on more Genzyme.

More Big Lots and Genzyme

2011-02-14T10:46:00.004-05:00

I added to my position in Big Lots, Inc. (Ticker: BIG) at $41.25 and Genzyme (Ticker: GENZ) at $72.30. I’ve seen numbers now higher than $49 for Big Lots so I’ll let this one play out. We should be hearing soon regarding the potential acquisition of Genzyme by Sanofi (Ticker: SNY). I don’t think they will change much from the initial WSJ reports of $74 plus CVR. It’s been a long saga and I don’t think they will haggle over a dollar or two to risk this deal falling apart. Both companies need each other and it’s time for closure.

Edit:

I closed out my Big Lots position at $41.32 generating a 2% return over a 7 day period (102.86% annualized). I rolled the funds into more Genzyme at $71.99.

Emergency Medical Services Corp. = Done Deal, but...

2011-02-14T08:28:00.002-05:00

Emergency Medical Services Corp. (Ticker: EMS) is a done deal at $64, which was below the prevailing stock price of ~ $70 last Friday. Ouch… Clayton, Dubilier & Rice got a good deal on this one as I was expecting ~ $75. I’ll be out of this one today and move on to the next deal.

Edit:

I sold EMS at $62.97 and $62.98 generating a net LOSS of 8.47%. Looking back, would I have done anything differently? My answer is No! I'm ok with this trade. You learn and move on...

Back in SRA International, Inc.

2011-02-10T09:46:00.004-05:00

I’m back into SRA International, Inc. (Ticker: SRA) today at $27.77. It looks like this defense company is willing to sell out to private equity according to a Reuters report . This company would be a prime candidate for private equity as is has no debt with decent cash flow. Although the chairman has a controlling stake in the company, it appears he may be willing to sell. Time will tell…

Cash Advances

2011-02-09T16:54:00.005-05:00

There are many loan products on the markets and people have to be careful of which one to select from. You have everything from credit card cash advances to refund anticipation loans from your tax returns. I’m sure everyone gets those cash advance checks from the credit card companies in the mail all the time. It’s tempting to use those checks as they frequently offer zero percent interest rates for several months, but if you read the fine print, there’s often an upfront 4-5% charge for the loan amount. You do the math and the interest rate adds up. I would have to say that the majority of the time, you probably do not need these quick loans, but there may come a time in which you are in an emergency situation in which you need some money quickly. I doubt your bank will be willing to give you a loan in such a short period of time and if they do, I’m sure they will impose hefty fees and a long waiting period. In this tight lending environment, banks are definitely out of the picture. So where else can you go to obtain a quick and easy loan? If you really need money quickly, there are other options such as Payday loans. The Payday loans do charge higher interest rates because it’s the nature of the business. It’s a high-risk business, in which the companies will offer you immediate cash with little hassle and no credit check. Many Payday loan companies will approve your loan the same day and you will have the money the next day. There are several online companies offering easy cash advance via Payday loans. These online cash advances don’t have to be expensive if one pays off the loan and fee in a timely manner. They offer a valuable service in a niche market. I personally have not used a Payday loan service, but if there was ever an instance where I was stuck and needed some quick money, it’s an option I would consider. It’s good to know all of your loan options in case of an emergency. Like I said before, Payday loans are not for everyone, but it can be a lifesaver if an emergency arises.

The author received compensation for writing this article.

Initiated a Position in Big Lots, Inc.

2011-02-08T13:06:00.002-05:00

I initiated a position in Big Lots, Inc. (Ticker: BIG) at $38.95. The wires are reporting that the company is exploring strategic alternatives (also known as a sale). I see private equity all over this one as the company generates healthy cash flows with little debt. I’ve seen $49 per share being floated around so we’ll see…

Added to Emergency Medical Services

2011-02-08T11:14:00.003-05:00

I added more to my Emergency Medical Services (Ticker: EMS) position today at $70.03 and $69.99. We should be hearing the results of the auction soon. The latest news was that there were two private equity firms left bidding for the company. I’m looking for a takeout price in the mid 70’s.

Beckman Coulter = Done Deal

2011-02-07T08:36:00.008-05:00

It’s another merger Monday as Danaher (Ticker: DHR) is buying Beckman Coulter (Ticker: BEC) for $83.50 per share in cash. I’ll be generating a total return of 12.13% over a 47 day period. Assuming a holding period of 47 days, the annualized return will be 92.91%, but this is higher since I made a big purchase just last Friday. I’ll probably sell this position sometime this week. I’m keeping a close eye on Emergency Medical Services (Ticker: EMS) and Airgas (Ticker: ARG) as there should be news this week. Genzyme (Ticker: GENZ) is pretty much a done deal as we should hear of a definitive merger agreement from Sanofi (Ticker: SNY) by Wednesday.

Edit:

I sold my Beckman Coulter position at $82.68 on 02/08/11 generating a 11.02% gain.

More Beckman Coulter

2011-02-04T11:09:00.004-05:00

I doubled up on my Beckman Coulter (Ticker: BEC) position today at $74.01. We should be hearing very shortly regarding the outcome of the bidding process. The wires have been reporting that two private equity firms have submitted second (final) round bids. No word on any bids from the strategic buyer, Danaher (Ticker: DHR). A deal could be announced very shortly…

Edit:

I also doubled up on Emergency Medical Services Corp. (Ticker: EMS) today at $69.17.

Some BJ's

2011-02-03T11:35:00.005-05:00

I took a small position in BJ’s Wholesale Club (Ticker: BJ) today at $48.50. The company has officially put itself up for sale today. I don’t expect a huge premium, but a dollar here and a dollar there adds up. I’ll see how things develop before adding to this position. I can see a potential deal in the mid 50’s.

Edit:

I took a small gain in BJ's at $48.72.

Emergency Medical Services Corp.???

2011-01-31T12:45:00.005-05:00

What's up with Emergency Medical Services Corp. (Ticker: EMS)? The stock is up 2.78% on decent volume. Someone definitely knows something. We should be hearing soon with the final round of bids, which is due in early February. I like this special situations play. I’m going to hold on and see what materializes.

Edit:

Found this news from theflyonthewall.com: "Emergency Medical moves up following a DealReporter update. Emergency Medical is moving higher following an update by DealReporter that says there are two potential equity firms left in the bidding process for the company."

Back In Perrigo

2011-01-31T10:22:00.004-05:00

I got back into Perrigo Company (Ticker: PRGO) today at $71.89. This is one of the largest manufacturers of store brand OTC products and infant formulas. The trend is there for this company to continue to take market share from the branded products. A good example is the recent recall from J&J, which really questions the quality of the branded products. This company will do well as it presents a compelling alternative as in lower prices for consumers. I used to avoid the store brand products, but not anymore… I like this stock on both the fundamental and technical basis.

Edit:

Just sold Perrigo at $72.07...

Sold Sara Lee and a Few Other Trades

2011-01-26T12:59:00.004-05:00

What just happened to Sara Lee (Ticker: SLE)??? I’m out of Sara Lee at $18.59 generating a tiny gain. I got a little greedy by holding the stock to the next day instead of selling yesterday. It’s just part of the game… When a stock falls like this all of a sudden, someone knows something and usually it’s not good. I also sold SRA International, Inc. (Ticker: SRX) today at $27.04 generating a one day gain of 1.27% gain. This one may take awhile since they just hired their advisors to evaluate a possible sale and I don’t like the fact that the chairman of this company has the majority voting rights to nix a deal. I added to my position in Emergency Medical Services Corp. (Ticker: EMS) today at $66.05. We should be hearing soon regarding the results from the second round of bidding.

Oh, one more trade I almost forgot… I’m back in Perrigo Company (Ticker: PRGO) at $73.83.

Edit:

And out of Perrigo Company at $74.00.

Some SRA International, Inc

2011-01-25T10:33:00.002-05:00

I initiated a position in SRA International, Inc. (Ticker: SRX) at $26.70. This is a defense company specializing in Command, Control and Reconnaissance. This company has hired financial advisors to review buyout offers. There is a lot of activity in the defense M&A space. I believe there is a high probability of an acceptable offer. I’ve had good results playing the defense companies and hopefully it continues.

I’ve been trading Sara Lee Corp. (Ticker: SLE), but this one is a tough one to figure out. It appears that potential bidders are not offering a big premium, which may force the company to spin off their divisions. I currently have no position in Sara Lee, but of course things can change in a blink.

Edit:

I'm back in Sara Lee at $18.44. How things quickly change...

Genoptix = Done Deal

2011-01-24T07:41:00.005-05:00

It’s a little bit of merger Monday today as Genoptix, Inc. (Ticker: GXDX) will be acquired by Novartis (Ticker: NVS) for $470 million or $25 per share in cash. I definitely did not expect a deal to happen this fast, but I’ll take a 19% return (162% annualized) any time. I didn’t have quite the conviction to back up the truck on this one, but I can’t complain. I’ll most likely sell my position today.

Edit:

I sold my position in Genoptix, Inc. at $24.85 per share generating a 18.33% gain (157% annualized).

Added Emergency Medical Services Corp

2011-01-20T16:17:00.001-05:00

I was trading Emergency Medical Services Corp. (Ticker: EMS) today. Bloomberg reported this morning that the company has received at least four bids from private equity companies. I picked up some shares this morning at $65.90 and subsequently sold at $66.35. I bought back the shares at the end of the day at $65.90 and will most likely hang on to those. But we’ll see how things develop… You have to be careful with this market right now so I’m playing things a bit cautiously.

Some Perrigo

2011-01-20T11:49:00.006-05:00

What a lousy market... I did pick up a few shares of Perrigo Company (Ticker: PRGO) at $71.60. I’ve been following this company and today was a nice breakout and strong volume. The company announced the acquisition of Paddock Laboratories, which will be add to earnings in both 2011 and 2012. Now, this is how you add value for shareholders. This company basically manufactures generic OTC medications for store brands. I see this one going much higher…

Edit:

I sold Perrigo today at $72.34 generating a net gain of 0.93%. I just don't like the tone of the market.

Apple Blow Out

2011-01-18T16:51:00.001-05:00

Are you kidding me??? Apple (Ticker: AAPL) just totally blew away the numbers and it’s not even funny. The company reported revenues of $26.74 billion versus consensus of $24.4 billion and EPS of $6.43 versus consensus of $5.42. I was thinking about selling my shares in Apple, but not any more with numbers like this. All I can say is wow….

More Beckman Coulter

2011-01-07T16:38:00.002-05:00

Oh nooo the sky is falling… What happened to Beckman Coulter (Ticker: BEC)!? No worries, I added to my position today at $74.24. Risk arb players tend to be a finicky bunch of people and any sniff of a problem, they run for the exits. Today, Reuters reported that strategic buyers were dropping out and this caused the sell off in the stock. This auction process will run its course and we’ll know more concrete info in February as the second round bids are in. You need to be patient and be opportunistic in these risk arb plays.

Bought Integral Systems, Inc

2011-01-07T13:41:00.006-05:00

Here we go again, another defense contractor, Integral Systems, Inc. (Ticker: ISYS), has put itself up for sale. I like this special situations / risk arb play and picked up some shares at an average price of $11.13. There is a thin float and I accidentally entered my first order as a market order and paid up for some expensive shares. I subsequently added to my position using limit orders. I’ve had good luck with these defense companies. Will it continue? We shall see…

Edit:

I took my profits in Integral Systems, Inc. today at $11.40 generating a 2.47% gain. This one is on my watch list and will likely get back in at a decent price. A nice little gain to start the New Year…

My 2010 Performance

2011-01-07T12:18:00.006-05:00

A year in review… So I finally decided to crunch my numbers and 2010 turned out to be a decent year with a 31.87% total return in my non retirement account. I employed a mix of strategies ranging from risk arb / special situations plays, growth stocks and short term trading. A good chunk of the gains were from my holding in Genzyme Corporation (Ticker: GENZ) and the numerous risk arb / special situation plays. I did have 3 losing trades: Javelin Pharmaceuticals, Fidelity National Information Services, Inc. (Ticker: FIS) and Intermune, Inc (Ticker: ITMN). Javelin Pharmaceuticals was a painful one, but I was able to recover nicely from that trade in the second half of the year. I’ve learned that minimizing losses is the key in generating positive returns. I’ve executed numerous trades in 2010, but those 3 losses are still the most memorable. I simply hate losing any $$$ on a trade! So do I think I can repeat this performance? I think so, but it’s definitely not easy at all…

The Big JP Morgan Healthcare Conference (Genzyme and Sanofi)

2011-01-06T16:30:00.004-05:00

The JP Morgan Healthcare Conference (the one that really matters) takes place next week in San Francisco. I’m sure the rooms will be packed when Genzyme (Ticker: GENZ) and Sanofi-Aventis (Ticker: SNY) present on Tuesday, January 11th. I believe Genzyme presents in the morning and Sanofi later in the day. In any case, you can bet that during the break out sessions, the only questions the analysts will be asking will be on the takeover of Genzyme by Sanofi. Reuters also mentioned today that there are no scheduled meetings between the two CEO’s during the conference. Duhhhh… Why would they let the world know that they are going to meet??? I’m sure they’ll find an appropriate place and time to meet, but they’re going to keep it way down low. I believe a deal will happen in January.

Fixing A Mistake: Back in Beckman Coulter, Inc.

2010-12-23T16:30:00.004-05:00

I realized I made a mistake yesterday in selling Beckman Coulter, Inc. (Ticker: BEC). So how do I fix it? I sold the shares of Mastercard Incorporated (Ticker: MA) that I bought yesterday @ $218.21 resulting in a break even trade. I added back my Beckman Coulter position @ $74.86, $75.09 and $75.10. I want to continue to build a good position in Beckman Coulter because I have a strong conviction on this one.

More Mastercard Incorporated

2010-12-22T15:42:00.002-05:00

I don’t do this often, but I decided to average down on Mastercard Incorporated (Ticker: MA) at $217.89. People are going crazy over the proposed action by the fed to cap interchange fees for debit card transactions. I can see banks simply just say “screw it” with debit cards and focus on the more profitable credit cards. I’ve never used a debit transaction and don’t see any benefits in using it. I use credit transactions all the time and on just about everything. However, I do pay off my balance in full and reap the cash back bonus rewards. Ok, I’m veering off topic… I did sell my position in Beckman Coulter, Inc. (Ticker: BEC) at $74.74 (generating a 1% gain over a 3 day period or 120% annualized) to pay for Mastercard Incorporated.

My risk arb play in Airgas, Inc. (Ticker: ARG) isn’t fairing that well. I don’t see anymore downside, but it will take some months for it get up to the 70s. I’ll have to see what happens in the New Year as the judge makes his decision on the validity of the poison pill.

Also Genoptix, Inc. (Ticker: GXDX) is not acting so well, but this company has tons of cash so that should buffer any downside. I have to dig up some more info on this to see what’s going on.

Sold Applied Signal Technology

2010-12-20T10:05:00.005-05:00

I sold my position in Applied Signal Technology (Ticker: APSG) this morning at $37.78 per share generating a net gain of 7.39% over a 2 week period (190% annualized). I like to look at annualized returns when I’m dealing with risk arb plays. I’m back in Beckman Coulter, Inc. (Ticker: BEC) today at $74.00. With news of multiple bidders, I’m starting to think that $90 is a real possibility. I’m going to hold tight on Beckman Coulter now. And a little more risky trade, I picked up some The KEYW Holding Corporation (Ticker: KEYW) at $13.94 per share. This is a small defense contractor with a strong focus on cyber security. I’m looking for this one to get taken out eventually. This is also a decent company on a fundamental basis and has a strong management team.

Edit:

I sold The KEYW Holding Corporation today at $14.26 generating a 1 day gain of 2.22%. I'll likely get back in on any pull backs...

Applied Signal Technology for $38.00

2010-12-20T07:40:00.005-05:00

Nice to see first thing on the morning headline news: “Raytheon (Ticker: RTN) buying Applied Signal (Ticker: APSG) for $490 million”. So Raytheon has agreed to purchase Applied Signal Technology for $38 per share in cash. This was the top end of the valuation range so no complaints at all… I was looking for $37 and had a hunch that Raytheon would win the bidding contest. My average cost was $35.12 so I’m looking at a ~ 8% return over a 2 week period. I’ll see where Applied Signal Technology opens before deciding to sell or wait a bit. This was a very low risk trade if you listen to what Applied Signal Technology and Raytheon were saying.

Full Position in Genzyme

2010-12-17T16:38:00.003-05:00

I’m done with Genzyme (Ticker: GENZ)… I’m done backing up the truck in Genzyme stock that is! Now, I have a full position and it’s time to sit back and watch the high stakes poker game. Seriously, we’re really close to the finish line with Sanofi-Aventis (Ticker: SNY) looking to acquire Genzyme. Sanofi has a plan in place and will execute it in January. Meanwhile, Genzyme will make a last ditch effort to convince people of the value in Campath for MS next week. The players are slowly revealing their hands…

Some Visa and Mastercard

2010-12-17T08:29:00.008-05:00

What the heck… Sometimes, I enjoy some pain in trying to catch a falling knife. I picked up some Visa (Ticker: V) @ $68.75 and Mastercard (Ticker: MA) @ $227.52 yesterday during the sell off. I definitely didn’t pick the bottom, but the value was there and these companies will eventually rebound. I’m planning on hanging on both of these for awhile…

Oh, I sold my position in Emergency Medical Services (Ticker: EMS) @ $64.28 (generating a 0.37% over a 3 day period) to pay for Visa and Mastercard.

Edit: 12/17/10

I just lost a couple of fingers... A Small Oouch!

Initiated Positions in Genoptix and Emergency Medical Services

2010-12-14T16:27:00.005-05:00

I took some quick profits in Beckman Coulter (Ticker: BEC) @ $71.05 (generating a one day gain of 0.32% gain). I’m still looking to buy back into Beckman Coulter in the low 70’s. I initiated some new positions in Genoptix, Inc. (Ticker: GXDX) @ $21.00 and Emergency Medical Services Corp. (Ticker: EMS) @ $64. Both of these companies are for sale as they are exploring “strategic alternatives”. For the time being, I shifted the funds from Beckman Coulter to these companies as I see a bit higher returns versus Beckman Coulter.

Lots of decisions right now… We should hear next week the results of the bidding for Applied Signal Technologies. I’m looking at $36 to $37 per share, but it could end up a tad higher if the bidding gets heated. There’s not much of this type of defense companies around anymore so there will be a scarcity premium. The company has stated that it wants $38, but will the bidders pay up? My gut tells me that Raytheon (Ticker: RTN) gets this company for around $37.

Some Airgas and Beckman Coulter

2010-12-13T13:06:00.001-05:00

I started sniffing around at some more risk arb plays… I picked up some Airgas (Ticker: ARG) last week @ $65.76. This one is full of drama and I don’t think Air Products & Chemicals (Ticker: APD), Inc will just give up the fight just yet. The big question is whether the Airgas poison pill will hold up in court. From my M&A course, we were taught that poison pills have not been effective in preventing a takeover and is used as a tool to maximize the share price of the target company. We shall see shortly…

I also picked up a few shared of Beckman Coulter (Ticker: BEC) today @ $70.82. I see this eventually be taken out at $80+. It’s still in the early bidding process, but I have the conviction to hang in there with this one.

Finally, I’ve been trading Radware (Ticker: RDWR), which is rumored to be acquired by Riverbed (Ticker: RVBD) or Hewlett-Packard (Ticker: HPQ) for $45+. I basically just broke even on the trades. I don’t have a strong conviction on this one and I’m just going to leave this one alone.

Some Trades: MEE, PRPX and APSG

2010-12-06T21:58:00.005-05:00

I took my profits in Massey Energy (Ticker: MEE) @ $51.42 generating a 1.8% gain over a two day period. I sold at the open and should have waited just a bit as the stock gained some momentum through the day. I need to learn not to mess with trades in the first 30 minutes of the opening bell.

I sold my position in Portec Rail Products (Ticker: PRPX) today @ $11.60 generating a 0.43% gain over a two day period. L.B. Foster needs at least 65% Portec Rail Products shares tendered for the deal to go through. The latest figure was ~ 63% tendered so it looks like some have withdrawn their tendered shares. A few months back, over 65% of the shares were tendered. I think there’s a possibility that L.B. Foster Co. (Ticker: FSTR) may extend the tender until the end of the year to get their hands on more shares. In any case, I believe there’s lots of value in Portec Rail Products. I just needed to free up some cash to play Applied Signal Technology (Ticker: APSG).

Sooo on to another trade today… I got in and out of Applied Signal Technology generating a 2.62% gain. Not a bad day… Lots of small gains and that’s basically my strategy these days.

Some Portec Rail Products and Massey Energy

2010-12-04T13:37:00.006-05:00

So yesterday, I picked up a few shares of Portec Rail Products (Ticker: PRPX) @ $11.55 and Massey Energy Co. (Ticker: MEE) @ $50.51. Why Portec Rail Products? This company is in the process of being acquired by L.B. Foster Co. (Ticker: FSTR) for $11.80 in cash. The closing is currently being held up because the DOJ is seeking some divestitures before signing off on the deal. The current tender offer expires on December 15th and I believe there’s a high probably that the deal will close by December 15th. Even if for some reason this deal gets derailed, I see Portec Rail Products stock going up because it is very cheap. I see this as a very good risk reward opportunity. The only downside is the thin float, which makes it very difficult to accumulate a good position. I was only able to buy half of what I wanted because of the thin volume. I may try to buy more next week if the price is right.

Now onto to Massey Energy… The company has announced that it is exploring strategic alternatives (also known as a sale). This morning it was announced that the CEO, Don L. Blankenship, will be retiring at the end of this month. This tells me that the company has a very high probability of being sold. The CEO was pretty much against a sale, but now he’s out of the way. Alpha Natural Resources (Ticker: ANR), ArcelorMittal, Arch Coal (Ticker: ACI) and a state run coal mine company in India have been rumored to be interested in Massey Energy. We should see a nice little pop on Monday…

Sold Rest of Del Monte Foods

2010-11-29T14:50:00.006-05:00

I sold off the rest of my Del Monte Foods (Ticker: DLM) position today at $18.86. There is a possibility of a higher bid during the “Go Shop” period, but the probability is low. Holding here until closing would generate an additional return of only 0.74% (~2.97% annualized). This was not worth it and the stock will drop back down if a higher price doesn’t materialize during the “Go Shop” period.

I took a tiny position in Soda Stream (Ticker: SODA) today @ $40.78 just for the fun of it. It’s an interesting little company with lots of potential. They report earnings after the bell today and it will most likely be good since it’s their first earnings report as a publicly traded company. Plus, I’m actually tempted to buy their product.

Edit:

I just sold my position in Soda Stream @ $42.00 for a 2.99% gain.

Del Monte Foods for $19.00 (Now Official)

2010-11-25T14:55:00.005-05:00

Well, it’s official now… Del Monte Foods (Ticker: DLM) issued a press release stating that it has signed a definitive agreement to be acquired for $19.00 per share by KKR (Ticker: KKR), Vestar Capital Partners and Centerview Partners (click: here). An interesting note is that there is a “Go Shop” clause in which Del Monte Foods can solicit higher bids through January 8th. I wouldn’t be surprised if they are successful in soliciting a higher bid. This company is a prime target for private equity.

Here are my Del Monte Foods trades:

11/19/10 Bought 2X @ $17.549
11/19/10 Bought 1X @ $17.4199
11/19/10 Bought 0.5X @ $17.2999
11/19/10 Bought 0.5X @ $17.1999
11/19/10 Bought 1X @ $17.2496
11/19/10 Sold 1X @ $17.37
11/23/10 Bought 1X @ $17.2196

Net long 5X with an average price of $17.397

Edit:

11/26/10 Sold 1X @ $18.77

I will hold the remaining 4X to see if anything develops during the "Go Shop" period.

Del Monte Foods for $19.00

2010-11-25T12:27:00.007-05:00

The New York Times DealBook blog just reported that Del Monte Foods (Ticker: DLM) has agreed to be acquired by a group of private equity investors (KKR (Ticker: KKR), Centerview Partners and Vestar Capital Partners) for $19.00 per share (click: here). That’s $0.50 per share higher than the initial rumored price of $18.50 per share. Not bad…

Almost There with Del Monte Foods

2010-11-24T16:29:00.004-05:00

A very nice move in Del Monte Foods (Ticker: DLM) today! Bloomberg is reporting that Centerview Partners and Vestar Capital Partners will be joining KKR (Ticker: KKR) in the leveraged buyout of Del Monte Foods. They are looking to finalize the deal within the next few days. I have a good position in this one so no complaints. I don’t know why this had such a wide spread for a fairly safe risk arb play. Take it when you can…

Some Del Monte Foods

2010-11-20T15:45:00.004-05:00

Yesterday, I picked up a few shares of Del Monte Foods Company (Ticker: DLM), which is rumored to be taken over by KKR (Ticker: KKR) in a leveraged buyout. The price being floated around is $18.50 per share. I purchased shares throughout the day with an average cost of $17.45 per share. We should hear in a week or two whether they are able to close this deal or not.

I’ve also been trading Massey Energy (Ticker: MEE), but that’s a tough one to place a big bet on. The board will decide next week whether to seek strategic alternatives (aka sale of the company). The CEO does not want to sell, but may not have a choice. I’m keeping a close eye on it.

My largest arb play is in Genzyme (Ticker: GENZ) and I have a strong conviction on this one. I’m adding to my position anytime it falls into the $69 to $70 range. I believe patience will be well rewarded.

Genzyme and Sanofi-Aventis (The Next Move)

2010-11-18T21:22:00.003-05:00

The next crucial date on the Genzyme (Ticker: GENZ)/ Sanofi-Aventis (Ticker: SNY) saga will be November 28, which is the date that Genzyme has to complete the move of its fill / finish operation for Cerezyme, Fabrazyme and Thyrogen out of their Allston manufacturing plant. If Genzyme does not meet this deadline, then the FDA can require the company to cough up 18.5% of revenue from these products. Sanofi is not going to make any move until it is clear that Genzyme is resolving its manufacturing issues and meeting the November 28 deadline will be a crucial test. I’m expecting Sanofi to do something around this time. Sanofi can increase the tender offer price, but must do so 10 business days before the expiration of the tender offer (the current tender offer expires on December 10). If Sanofi wants to increase the tender offer price, they have to do it by November 29. Many are speculating that Sanofi will simply extend the tender offer to buy additional time. In any case, I’ve continued to add to my Genzyme position.

Out of Crucell and More Genzyme

2010-11-15T22:22:00.002-05:00

I’ve been trading Crucell (Ticker: CRXL) heavily and now I am completely out of the stock. Crucell is a great risk arb play except for the fact that the acquisition price in is Euros. I have no doubt that this deal will close, but now the Euro looks very shaky and a declining Euro can wipe out the potential risk arb profits. Of course you can hedge by selling the Euro, but I like to keep it simple.

I started adding more to my Genzyme (Ticker: GENZ) position today. The big arb players are all over this. I can’t see how Genzyme stays independent with so many shares in hands of the arbs. One of the arb players I closely follow is Paulson & Co. In today’s SEC filing, Paulson picked up ~ 1.9 million shares in Genzyme. The 13F-HR filings for John Paulson (click: here).

Back In Crucell Again

2010-11-03T08:55:00.001-05:00

I’m back into Crucell (Ticker: CRXL) this morning at $32.30. I like to trade around the risk arb positions, but I’ll probably end up holding this one until closing. I don’t want to over trade this and miss the pop when they announce the results of the investigation. The Korean FDA will be reviewing the results of the investigation, which is expected for an event like this. Right now, I really like the Crucell / Johnson & Johnson (Ticker: JNJ) and the Genzyme (Ticker: GENZ) / Sanofi-Aventis (Ticker: SNY) risk arb plays.

Sold Crucell

2010-11-02T15:47:00.003-05:00

I sold my position in Crucell (Ticker: CRXL) today at $32.57 generating a 0.86% gain (~77% annualized return) over a 4 day period. Nothing wrong with this risk arb play, but I just wanted to free up some cash and reduce my margin just a bit. The market has had a good run and there may be some good opportunities brewing.

More Crucell

2010-11-01T13:06:00.002-05:00

When you have a strong conviction in a trade, you just have to go with it. I continued to add to my position in Crucell (Ticker: CRXL) today at $32.15 and $32.10. I believe Crucell with the assistance of Johnson & Johnson (Ticker: JNJ) will complete their investigation of the potential contamination issue at their Korean manufacturing facility. This facility is being phased out in 2011. The manufactured products from the Korean facility are currently placed on hold pending the completion of the investigation. Once the investigation has been completed, they can justify the release of the products. They have stated that they plan to complete their investigation by the end of November. I really like this risk / reward opportunity.

Picked Up Some Crucell

2010-10-29T11:52:00.004-05:00

I loaded up on some Crucell (Ticker: CRXL) today ranging from $32.38 to $32.44. Crucell is in the process of being acquired by Johnson & Johnson (Ticker: JNJ) for 24.75 Euro, which equates to ~ $34.40 US. The stock sold off these past two days because the company halted shipment of two vaccines manufactured in their South Korean manufacturing facility due to possible sterility issues. The market is over reacting big time and I’m fairly confident that the deal with go through. Looking at a potential 6% gain of course there will be some currency risk.

Missed CommScope

2010-10-27T18:38:00.005-05:00

This is what happens when you try to be cute with your trades. CommScope, Inc. (Ticker: CTV) officially agreed to be bought out for $31.50. I didn't think they would reach a definitive agreement this soon so that's why I was trading CommScope, Inc. If I only held on one more day. Oh well, you can't be too greedy...

Sold CommScope Again

2010-10-26T14:45:00.002-05:00

I sold CommScope, Inc. (Ticker: CTV) today at $30.17 generating a one day gain of 0.56%. Nothing else much…

CommScope Again

2010-10-26T10:30:00.002-05:00

Ok, I’m back in CommScope, Inc. (Ticker: CTV) today at $30.00. Like I said yesterday, this is a pretty good risk reward opportunity for a risk arb play.

Sold CommScope

2010-10-25T14:37:00.004-05:00

I decided to take my profits in CommScope, Inc. (Ticker: CTV) today at $30.27 generating a 0.90% return in one day. In the risk arb game, this is a decent return. It’s all about hitting singles and doubles in this game. I rarely ever swing for the fences unless the odds are heavily in my favor. Now, I want to focus back on the Genzyme (Ticker: GENZ) / Sanofi-Aventis (Ticker: SNY) take over play.