Some Venoco

I picked up a few shares of Venoco, Inc. (Ticker: VQ) today at $11.21. This company has agreed to a management buyout for $12.50 per share in cash. It’s a high risk merger arb play as the financing is not yet complete. The financing is currently being finalized with a deadline for completion of the deal by September 14th. I would say that there’s more than a 50% chance that this deal gets done. The company should be making an announcement on the status of the financing by September 4^th. This position only makes up ~ 2.7% of my portfolio. I guess we’ll know the outcome of the debt financing next week…

Some Nexen Again

I started to build a position in Nexen, Inc. (Ticker: NXY) again by picking up a few shares this morning at ~ $25.28. Earlier this month, I sold out my entire position at ~ $25.90. I'm looking for a potential net gain of 8.78% by the end of the year (~ 26% annualized return). The Canadian regulatory agency has started the review to determine if this deal is a “net benefit” to the county. This deal clearly provides a “net benefit”, but there’s going to be a lot of political posturing on both the Canadian and US side. In the end, I see a very high probability that this deal gets done.

Edit: Ok, I have itchy fingers today. I sold at $25.32 and bought back at $25.26 and $25.22. This currently makes up ~ 12% of my portfolio so it's an ok position for now.

Sold Gushan Environmental Energy

I sold my position in Gushan Environmental Energy, Ltd. (Ticker: GU) today at $1.53 generating a net gain of 2% over a 14 day period (~ 51% annualized return). This company is in the process of being taken private for $1.57 ($1.63 minus the $0.05 ADR fee) and is scheduled to close by the end of September. I closed out my position because I just didn’t feel comfortable holding through the closing. There is a shareholder vote pending and there is a small probability that shareholders might vote down this merger. Lot’s of angry shareholders in this stock, who paid much higher prices. This was a relatively small position as it made up ~ 5% of my portfolio.

Allos Therapeutics = Done Deal

Allos Therapeutics, Inc. (Ticker: ALTH) just announced that the FTC has cleared its merger with Spectrum Pharmaceuticals, Inc. (Ticker: SPPI). The tender will expire on September 4th and payment should occur promptly thereafter (most likely within a week after the expiration of the tender offer). Allos Therapeutics made up ~ 11% of my portfolio so I'll be a nice little gain (2.24% return or ~ 53% annualized).

Some Allos Therapeutics

I’ve been doing a little research into Allos Therapeutics, Inc. (Ticker: ALTH), which is in the process of being acquired by Spectrum Pharmaceuticals, Inc. (Ticker: SPPI) for $1.82. Originally, there was a CVR linked to the European approval of Folotyn, but that got the thumbs down so no CVR just $1.82 in cash. This deal is being held up due to a second request by the FTC. Looking at the drug portfolios of Spectrum and Allos Therapeutics, it’s hard to see how they can even think of blocking this deal. Spectrum has Zevalin, which is used to treat non-Hodgkin’s Lymphoma. Zevalin has pretty much been a disappointment. Allos Therapeutics has Folotyn, which is used to treat refractory peripheral T-cell lymphoma and generates $50 + million in annual sales. Both of these drugs are not even close to being blockbuster status (over a billion dollars in sales) when you compare them to Rituxan. The latest tender expires on September 4th. I’m looking for a September 7th close if it works out (potential 2.24% return or 53% annualized).

Out of Dollar Thrifty

I sold my position in Dollar Thrifty Automotive Group, Inc. (Ticker: DTG) today at $80.95 generating a net gain of 1.77% over a 2 day period. I added more this morning at $79.16 with an average price of $79.53. This was decent sized position as it made up ~ 20% of my portfolio. There is too much buzz going on with Dollar Thrifty right now...

Another Shot at Dollar Thrifty

Ok, I decided to take another shot at Dollar Thrifty Automotive Group, Inc. (Ticker: DTG). I picked up a few shares today at $80.08. Back in July, I traded Dollar Thrifty for a quick profit, but now it feels like a real deal is coming from Hertz Global Holdings, Inc. (Ticker: HTZ). The street is looking for something in the high 80’s. Hertz probably doesn’t want to play games and drag this out any longer. They will probably make a very compelling bid to get Dollar Thrifty.

Edit: I picked up a few more shares at $79.44 and $79.23 with an average price of $79.65.

Sold Fushi Copperweld, Inc.

I sold my position in Fushi Copperweld, Inc. (Ticker: FSIN) today at $9.03 generating a net gain of 4.46% over a 55 day period (~29% annualized return). It’s one of those going private China plays and I didn’t want to get too greedy. It’s a good return and it’s time to move on…

Out of Ancestry.com and Nexen

I sold my position in Ancestry.com (Ticker: ACOM) today at $30.10 generating a net loss of 7.91% from my most recent purchase. The market is telling me that there is probably not going to be a deal for this company. My overall loss from this position is 4.77% when I factor in my recent trades in and out of the position. It was worth a shot, but you need to limit your losses and move on. I actually like this company on a fundamental basis, but I entered into this position as a special situations play and need to be disciplined on my entry & exit strategies.

I also sold out of my position in Nexen, Inc. (Ticker: NXY) today at $25.91 and basically breaking even on the trade. This deal is going to take a long time to close. If all goes well, this will likely close in December, but if there are extended reviews you’re looking into the first half of 2013.

Back In Ancestry.com

I continued to trade in and out of Ancestry.com (Ticker: ACOM). I think I’m finally going to hang on to my last purchase, which was executed today at $32.70. We should be hearing soon whether this company goes private or not. The dealReporter has mentioned that the company received final bids last week.

Surmodics, Inc. Dutch Tender

This is my first time in participating in a Dutch auction tender offer. Yesterday, I picked up 99 shares of Surmodics, Inc. (Ticker: SRDX) at $17.58 and tendered the shares with a “no bid”. The company is buying back $55 million worth of stock with a price range of $17 to $19. There is an odd lot priority so all odd lot tenders will be sold at the final tender price. I’m looking at a final tender price of more than $18.00.

Some Gushan Environmental Energy Limited

I picked up a few shares of Gushan Environmental Energy Limited (Ticker: GU) today at $1.50. This is one of those Chinese going private plays. The company is being taken private for $1.57 ($1.62 - 0.05 ADR fee = $1.57), which equates to a 4.67% return (~32% annualized return assuming a closing at the end of September). The company has been timely with all of the required SEC filings and today issued a proxy statement in which the shareholders will vote on the merger on September 20th. This deal should close promptly after the vote (the company is guiding for a Q3 close).

Plan with Express Scripts

I still hold a good amount of Express Scripts (Ticker: ESRX) shares acquired from the Medco merger with a cost basis of $56.49 (based on the fair value of Express Scripts at closing of the merger). I did sell some back in April at $58.44 to add to the Motorola Mobility merger arb play. My original plan was to sell the rest of my holding in Express Scripts when it reached ~ $60, but after yesterdays earnings release I’ve changed my plans. Express Scripts has a lot more room to run and will hang on as long as they show good numbers.

Sold Ancestry.com

I sold my holding in Ancestry.com (Ticker: ACOM) this morning at $33.15 generating a net gain of 1.25% over a 6 day period. I’m reducing my risk profile (reducing leverage) as we head into the second half of the year. I’ll focus more on announced mergers and play it safe than speculating on pre-mergers.

Talbots, Inc. = Done Deal

Sycamore Partners announced that they will complete the deal to purchase Talbots, Inc. (Ticker: TLB) on August 3, 2012. This was a somewhat more risky arb play because of the conditions placed for completion of the tender offer. In any case, everything went smoothly as planned. My net gain from this merger arb play was ~ 6.6% (~ 35% annualized return).

Close Call with Inhibitex, Inc.

Back in January / February I was in very big on the Inhibitex, Inc. merger arb play. Inhibitex received a nice bid from Bristol-Myers Squibb Company (Ticker: BMY) for its hep C drug, which was in early phase clinical trials. Fortunately, the deal closed without a problem in February, but looking back now it was a bit crazy going “all in” on a merger arb play. Today, Bristol-Myers announced that they have stopped the clinical trials due to serious adverse effects, which involved Inhibitex’s hep C lead drug. If this happened before the closing in February, I would have been burnt toast.

Initiating a Position in Ancestry.com

I’ve been trading in and out of Ancestry.com (Ticker: ACOM) for the past few days. Today, I started building a position @ $32.73 based on the potential buyout by private equity firms. The company’s valuation is still very reasonable with an earnings growth rate in the mid-teens, which should command a decent premium in a buyout. The NY Times have floated a take out price of ~ $35 to $39 a share with second round bids due in early August (click: here).