Thursday, April 02, 2020

March 2020 Performance

In this environment, just have to ensure safety and good health. This is much worse than the 2007 – 2008 financial crisis. Back then I remember people were still going about doing there normal routines. In this COVID-19 scenario, everything has ground to a complete stop. There’s no play book for this… Just have to ensure your portfolio doesn’t blow up and be still in the game with the market eventually recovers.

I’m not adding aggressively to anything. It’s a landmine out there. I nibbled on some Visa (Ticker: V) and Mastercard (Ticker: MA). Also playing some merger arb stuff such as Forty Seven (Ticker: FTSV) (short Puts) and Jumei International Holding (Ticker: JMEI) (long common). Forty Seven and Jumei International Holding are scheduled to close next week. Lots of really good spreads in the merger arb space, but of course there will be some blowups. Definitely staying away from PE buyouts as they have a history of walking from deals when the market gets shaky.

Stay Safe!

2020 YTD Performance = -13.8% with the running monthly returns as follows:

January +2.7%
February -6.8%
March -9.9%

Wednesday, April 01, 2020

Jumei International Holding

I took a small stab at Jumei International Holding (Ticker: JMEI) (~ 2% position @ $19.50). This is one of those going private China plays for a takeout price of $19.95 ($20 minus $0.05 ADS depository fee) The tender has been extended to April 8th. From what I can gather, they have sufficient votes already tendered and financing is in place to meet the conditions for closing. For some reason, even though the tender expires on April 8th, my broker’s tender deadline is today. The odds look good for a closing next week, so we’ll see…

Sunday, March 01, 2020

February 2020 Performance

I guess I was wrong when I said that this bug would be a minor annoyance! The market sold off hard in a quick manner, but I still don’t see value except for the energy sector. We’re essentially back to the beginning of the year although there are some stocks that got hit big. For example, Constellation Brands sold off because of the name “Corona”? Are you serious? I’m glad the company came out and stated that their beer sales continue to grow during this period. Also, the company will be hosting an analyst meeting this Wednesday and hopefully they will provide further clarity. The company better be in the market buying back their shares during this sell off. If I didn’t have such a large position in Constellation Brands, I would have picked up a few more shares.

I continue to be patient and have not bought any stock (yet) during this correction. So, we’ll see how things shake out…

2020 YTD Performance = -4.28% with the running monthly returns as follows:

January +2.7%
February -6.8%

Sunday, February 02, 2020

January 2020 Performance

January started out strong and then the virus bug hit the market. My portfolio was able to produce a small gain of 2.7% for January. There were no changes to my holdings other than the closing of the Medicines Company arb play. The proceeds from the Medicines Company went back to my cash holding (currently ~ 15%). This market had been priced for perfection so it will be interesting to see how much of an impact this bug will have on the market. I think it will just be a minor annoyance and the market will take this in stride. The headline news will be ugly, but just need to remain calm and look for opportunities when people start being irrational.

What a start to the New Year…

2020 YTD Performance = +2.7% with the running monthly returns as follows:

January +2.7%

Thursday, January 02, 2020

2019 Year End Review

I was expecting 2019 to a be flattish to down year based on the market action in the end of 2018. I maintained a conservative stance with ~ 15% cash through the year. I did not expect to generate a ~ 40% return in 2019. It was a buy and hold year with no changes to my holdings. I did take advantage of some merger arb plays, which contributed to ~ 6.25% of the total returns. I was able to generate some alpha from the merger arb plays. All in all, I was very pleased with this performance and hopefully I can continue to generate positive returns in the future.

So, what worked in the long portfolio… Apple (Ticker: AAPL), Alibaba (Ticker: BABA), Mastercard (Ticker: MA) and Visa (Ticker: V) generated market beating performance. Apple’s performance just blew me away, which was a nice surprise. The laggards in my portfolio were Qiagen (Ticker: QGEN), Sanofi (Ticker: SNY) and Constellation Brands (Ticker: STZ). Hopefully, these laggards will make a comeback in the new year. I currently have no plans to make any changes to this portfolio.

Moving onto the merger arb space. There were just three arb plays that contributed to most of the returns in this space. The companies were Loxo Oncology, Spark Therapeutics and Tesaro. Tesaro was the biggest contributor and got me in a big bind. I went big in Tesaro with common and short Puts. After building my position in Tesaro, my broker suddenly decided that my position was too much of risk for them and had reached the “Point of No Return”. I had to close out a bunch of the options positions at the last minute, which cost me some $$$. I was not pleased as they waited awhile before issuing this margin call (long after building up the position). So maybe time to look for a new broker in the new year.

In 2020, I’ll continue to maintain this conservative tilt with a cash position of ~15%. I don’t see much value in this market except for the energy sector. I’ve always been intrigued with the oil services sector as you are starting to see some going bankrupt. Maybe a good time to nibble on some of the potential survivors. I don’t care what people say, but we’ll always need oil.

I guess that is it for my 2019 review. It’s boring as not many trades were executed. Hopefully, I’ll come up with some profitable ideas in 2020.

As always… Have a Healthy and Prosperous New Year!

2019 Performance = +40.17% with the running monthly returns as follows:

January +7.4%
February +3.7%
March +5.06%
April +7.15%
May -7.90%
June +8.2%
July +1.53%
August +1.88%
September +1.00%
October +1.12%
November +4.75%
December +2.9%

Annual performance for the past eight years is as follows:

2012 +61%
2013 +44.61%
2014 +29.47%
2015 +33.48%
2016 +14.61%
2017 +42.12%
2018 -4.11%
2019 +40.17%

CAGR from 2012 to 2019 = 31.26%

Tuesday, December 24, 2019

Qiagen Is Not For Sale

Not for Sale! What a nice Christmas gift from Qiagen’s (Ticker: QGEN) Board of Directors… For me it was a mixed blessing as part of me didn’t want this company sold. I got into this stock when it went public in 1996 and has been a multibagger for me. I’ll continue to hang onto to this position (makes up ~ 5% of my portfolio) for the long term. This company will continue to do well as we’re really at the cusp of the molecular diagnostics wave. This certainly was a wild ride as I really thought that the company would sell out to Thermo Fisher Scientific (Ticker: TMO). I guess they were looking for a big premium, which I can’t blame them.

Monday, December 23, 2019

Bought Some: The Medicines Company

I’m just doing some very low risk arb trades now as we limp towards the close of the year. I nibbled on some The Medicines Company (Ticker: MDCO), which is being acquired by Novartis (Ticker: NVS) for $85.00 per share in cash. This deal has already received FTC approval, so risk of this deal breaking is minuscule. I acquired the common stock at $84.70, which will equate to a net gain of 0.3590% or annualized return of 6.80% (assuming cash hits the account by January 10th). This is ~ 15% position. I figure this is better than the rate I am earning in my money market account.