Thursday, June 30, 2011

Some More Blackboard and L-1 Identity Solutions

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.

Monday, June 27, 2011

Fundtech = Done Deal

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…

Friday, June 24, 2011


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.

Tuesday, June 21, 2011

Sold Apple and More Fundtech

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.

Monday, June 20, 2011

Level-1 Identity & Some Fundtech

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…

Tuesday, June 14, 2011

A Position in BJ's Wholesale Club

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…

Friday, June 10, 2011

L-1 Identity Solutions

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.

Tuesday, June 07, 2011

My Take on Gen-Probe

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…