October 2023 Performance

October was not kind to the portfolio. The big drag to the portfolio can be attributed to Constellation Brands, which declined ~ 6.5%. Apple and Visa were relatively flat. So overall, the portfolio declined ~1.62%. As we enter the seasonally strong months, I’m cautiously optimistic that we will end the year on a strong note.

I did go relatively big on two merger arb plays: Horizon Therapeutics and Activision. I went heavy on both via short Puts as the risk reward was favorable to a successful close. I managed to pick up some spare change in front of a steam roller without being flattened.

So nothing new, just trying to play it safe to the end of the year.

 
2023 Performance = +17.48% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%
May +1.02%
June +7.00%
July +3.85%
August -2.10%
September -6.10%
October -1.62%

September 2023 Performance

September was a brutal month with just about everything taking a dive. My portfolio declined 6.10% lead by all of my big holdings: Apple, Constellation Brands and Visa. It’s a really challenging market to have conviction to take on new positions. I do have a shopping list ready in the event the market does take a plunge for whatever reason.

I thought the market was starting to recover a bit with the recent IPOs. Other than the first day pop, the stocks (i.e. Arm Holdings and Instacart) could not hold onto their gains. Need some strong IPO follow through action to show market strength.

Not much on the special situations front. Still doing some short Puts here and there, but that has been it. A really, really boring month…
 

2023 Performance = +19.41% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%
May +1.02%
June +7.00%
July +3.85%
August -2.10%
September -6.10%

August 2023 Performance

August was a mixed bag with the market taking a small dip. The performance of my 3 largest holdings were as follows: Apple -4.27%, Visa +3.60% and Constellation Brands -4.29%. This contributed to an overall decline of -2.10% for August. It is really hard to have the conviction to initiate new positions in this market environment. I would like to see some high-quality IPOs come to market, but I do not see that happening right now. It is also hard to beat T bills with a ~ 5%+ risk free return.

In terms of special situations, I did play Activision and exited the position for a small gain after the dividend payout. I continued to play the short put game to make some pocket change. Also participated in the J&J tender offer (odd lot) for Kenvue and currently holding onto the position. I usually flip these spin offs, but Kenvue has an attractive valuation and a nice dividend payout. Who knows, maybe I will start to build on this position. Spin offs historically have outperformed the market.

Kind of disappointed with Fidelity with their recent online platform issues. Their recent performance has gone way down with the site being slow and system going down near the close of trading. I was with TD Ameritrade, and they also had their issues. Who else is left to try? Thinking of Interactive Brokers.
 
2023 Performance = +27.20% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%
May +1.02%
June +7.00%
July +3.85%
August -2.10%

July 2023 Performance

July turned out decent even with Apple and Visa doing nothing. The surprise contributor was Constellation Brands, which increased ~15% for the month after activist investor, Elliot took a stake in the company and implemented some shareholder friendly changes. This basically resulted in the entire gain for July. I certainly did not expect it, but there were some rumblings a few months back about some activist action. I see much more upside in Constellation Brands with Elliot taking a stake.

I’ve ventured back into the merger arb space with a ~ 20% position in Activision. This is now a wait and see game, hopefully we get clarification from the CMA by the end of the month. I just can’t see Microsoft going through all this drama and not close just because of the CMA.

That is all I have to report.

2023 Performance = +29.90% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%
May +1.02%
June +7.00%

July +3.85%

June 2023 Performance

This market continues to amaze me with this wall of worry rally. There is so much bearishness sentiment out there, but the market is discounting a lot of this news. We’ll eventually have that recession, but I can see the market rallying off the recession news. Right now, I’m cautious and maintaining a good cash position for opportunities that may arise. June was a strong month with a ~ 7% gain thanks to Apple. I have to admit that Apple’s Vision Pro demo was really impressive. I’ve been skeptical with all these VR headsets out there, but Apple is different and did a great job demonstrating use cases.

The portfolio remained status quo with no changes other than some small incremental cash from selling options. I’ve cut back a lot on selling options as I see risk in a market sell off. I’ll rather park the cash yielding ~4.75% and be able to sleep at night. When I have option positions, I always worry about that black swan event and sometimes have to sweat it out until expiration.
 

That's all I have...

2023 Performance = +25.08% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%
May +1.02%
June +7.00%

May 2023 Performance

Midway through the year and the market is holding up well considering the rise in interest rates and the geo-political issues. There were no changes made to the portfolio with the top three holdings making up ~ 80% of the portfolio (Apple = 42%, Visa = 21% and Constellation Brands = 20%). I’m still comfortable with this concentration but may gradually transition to an S&P 500 index approach.

I’m still selling out of the money options to generate some income. I’ve taken a more conservative approach by going further out of the money than I usually do. With interest rates this attractive, there no need to take additional risk.

I’ve stayed away from merger arb plays this year as the regulatory risk is way too high. This used to be my primary source of generating income, but just have to adapt to changing conditions.

 
2023 Performance = +17.60% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%
May +1.02%

April 2023 Performance

April was very quiet for me as I slowed down my options activity. With rates this high, it just didn’t make sense to push it by selling short puts / calls. I’m willing to do nothing and just let the cash sit and earn 4%+. I just want to be caught up in a black swan event, which can destroy a short put / call position. My big positions are as follows: Apple ~41%, Visa ~23% and Constellation Brands ~19%.

I can’t believe that I owned a position in First Republic Bank at one point. It was many years ago and subsequently sold it for whatever reason. The only financials I will own are Visa and Mastercard as they have proven that they can survive a financial crisis. I would never have thought in a million years that First Republic Bank would get into this kind of mess.

I also have not dabbled into any risk arb plays. I was very tempted to get into Activision Blizzard based on the rumor of an imminent UK approval. The UK decision to block the deal was a big big surprise. I’m glad I didn’t play it as I would have likely gone in big and would be in a little trouble right now.

Looking to add to some dividend paying stocks…
 

2023 Performance = +15.72% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%