More Cubist Pharmaceuticals

I closed out my remaining position in Multimedia Games, Inc. (Ticker: MGAM) yesterday by buying back the short Puts. This deal will close in a few days, but I needed some more buying power. I continued to aggressively add to my position in Cubist Pharmaceuticals, Inc. (Ticker: CBST) with an average price of $97.75. This position currently makes up ~ 30% of my portfolio. I have a very strong conviction in this deal closing in a timely manner. Merck initiated the tender offer today as expected with the offer expiring on 01/20/15. It’s not often you encounter such a nice risk reward opportunity.

LendingClub IPO

I decided to jump back into the IPO game and was able to snag a few shares of LendingClub (Ticker: LC). Obviously this was a hot offering (priced at $15 and opened around $24) and was very likely that I was going to be offered nothing. I’ll hang on to the shares for at least the next 30 days to comply with the brokerage firms flipping policy. In the meantime, I’ll do some more research into the company and decide if it’s something I want to build a position in. It is an intriguing company…

Initiated Position in Cubist Pharmaceuticals

I started scaling out of my Multimedia Games (Ticker: MGAM) position by selling the common and closing out some of the short Puts in order to allocate the funds to Cubist Pharmaceuticals (Ticker: CBST). I initiated a short Put position on Cubist yesterday, which was obviously a day too early! I initiated a long common position in Cubist today at an average price of $97.78. I see this as a very good risk reward play as Cubist sold off a bit on worries that Merck (Ticker: MRK) may pull out of the deal due to the adverse court ruling on Cubist’s lead product Cubicin. I can’t see how Merck if it even wanted to can pull out of this deal. No material adverse event (MAE) was triggered with this court decision and to pull out of a deal due to a MAE is a huge hurdle. The courts take a very dim view on those who try to back out of a deal using MAE as an excuse. In any case, I can see this deal closing in ~ 60 days via tender offer with a potential net gain of 4.31% or ~ 25% annualized.