Sunday, February 01, 2015

January 2015 Performance

The market volatility continues into 2015, which really shouldn’t be a surprise… January turned out ok for my portfolio. I was able to generate a net gain of +3.4%, which can be attributed to the closing of the merger arb play in Cubist Pharmaceuticals. The strong earnings performance of my largest holdings: Constellation Brands (Ticker: STZ) and Apple (Ticker: AAPl) also helped. Everything kind of clicked in January, but I would not expect this kind of performance going forward. It’s not often that I will find such a compelling merger arb play such as Cubist Pharmaceuticals.

Thanks to my readers for reminding me about the Safeway CVRs! I was playing Safeway via short Puts and did not pay much attention to the potential CVR payout. I bought a bunch of Safeway last Thursday at an average price of ~$35.16. With the anticipated cash payout of $34.92, I will be getting the Casa Ley CVRs for ~ $0.237. The company has stated that the fair market value of the Casa Ley CVR is $1.0149. That’s a potential ~ 300% gain if they are able to sell Casa Ley at the fair market value. The downside is that they have up to 3 years to sell Casa Ley so I’ll need to be a bit patient. The plus side is that there is a significant margin of safety and of course a nice potential payout.

I have a few merger arb plays on my radar, but still doing some work on them. That’s it for now…

2015 Performance Year to Date = +3.4% with the running monthly returns as follows:

January +3.4%


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