Constellation Brands, Inc.

With Nexen, Inc out of the way… I’m on the look out for the next special situations play. I’ve started building a position in Constellation Brands, Inc. (Ticker: STZ). This company will be the prime beneficiary in Anheuser-Busch InBev’s (Ticker: BUD) acquisition of Grupo Modelo. Anheuser-Busch has agreed to sell control of the Modelo brands such as Corona in the US and a Mexican brewery to Constellation Brands for a very fair (cheap) price. There is a good probability that the DOJ will accept this remedy in order to allow Anheuser-Busch to proceed with its acquisition of Grupo Modelo. This will be a transformational deal for Constellation Brands making it the 3rd largest beer company in the US. I really like this deal for Constellation Brands and should know in mid-March regarding the decision from the DOJ. I can see Constellation Brands easily going to $50+ with the ok from the DOJ.

Added to Nexen

I’m very cautious with this market right now and will only opt for trades with minimal risk. I added to my Nexen (Ticker: NXY) position today at $27.41 with the goal of generating a net gain of 0.307% within 10 days. This will equate to an annualized return of ~ 11% assuming I receive the cash in my account by March 1st. Cnooc (Ticker: CEO) has stated that it plans to close the transaction with Nexen next week.

Nexen = Done Deal

I’m sure you’ve heard by now that CFIUS has approved CNOOC’s (Ticker: CEO) acquisition of Nexen, Inc (Ticker: NXY). To say the least, this was one wild ride. I had a decent position prior to the Canadian approval and went All In after Nexen / CNOOC received the Canadian approval. I was surprised of the relatively wide spread, while the company was waiting for the CFIUS approval. CNOOC has basically stated that they would do just about anything to win CFIUS approval and close this acquisition. This was an excellent risk / reward opportunity. I’m pleased with the outcome although this dragged on a bit longer than I anticipated. My total net gain was 4.23% (annualized gain of 15.48%) assuming a close on 03/01/13. I employed maximum leverage on this deal so my annualized gain is actually much higher (just too lazy to do the math right now). I also had good gains from Nexen last year in which I traded in and out of the position. I’m going to take it easy a bit and start looking for some new good risk / reward opportunities.