Sunday, March 11, 2012

Initiated a Position in Venoco and Medco Health Solutions

Here’s an update on my merger arb positions:

I initiated a small position in Venoco, Inc. (Ticker: VQ) at $11.00. This is a management buyout play in which the CEO is offering $12.50 per share in cash for the company. The big warning bell about this deal is that there was no committed financing when the deal was struck. I do believe the CEO will find financing for this buyout considering where the price of oil is currently trading. This one is risky so I would not put on a big position even though the potential return is very attractive.

I sold my position in Motorola Mobility Holdings, Inc (Ticker: MMI) at $39.71 generating a whopping 0.01%. I used the proceeds to aggressively add to a new position in Medco Health Solutions, Inc. (Ticker: MHS) on Friday with prices ranging from $68.56 to $68.68. This deal is looking like it will get the go ahead from the FTC. MedcoHealth shareholders will receive $28.80 in cash and 0.81 shares in Express Scripts, Inc. (Ticker: ESRX) if the deal goes through.


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