Thursday, November 12, 2015

Sold Cleco and More WuXi Pharmatech

I liquidated my position in Cleco (Ticker: CNL) today at $49.77 generating a net loss of 4.78%, which takes into account of the upcoming dividend payout. I try to limit any losses to ~ 5% and this one just about gets there. In this game, you have to minimize your losses to protect yourself. The price action has been horrible. I was wrong and I learn from my mistakes…

I added to my position in WuXi Pharmatech (Ticker: WX). The shareholder vote is scheduled for November 25th. This deal is anticipated to close 12 working days after the vote, which works out to December 12th according to my calculations. I’m modeling the cash hitting my account by December 18th, which is still a healthy ~ 20% annualized return at today’s prices.

Wednesday, November 04, 2015

Some Cleco Corporation

I initiated a position in Cleco Corporation (Ticker: CNL) today at an average price of $52.68 (~13% position). There is also an upcoming dividend payout of $0.40 with an ex-div date tomorrow. This utility company is being acquired for $55.37 in cash by an investor consortium made up of Macquarie Infrastructure, British Columbia Investment and John Hancock Financial. This deal is estimated to close in Q1 based on the final approval from the Louisiana Public Service Commission. Next week there will be an Administrative Law Judge hearing to review the commitments made by the company. There’s been some criticism by the public on this deal, but that is always the case with any public utility merger. Macquarie has plenty experience in acquiring public utilities and I believe they will offer the appropriate commitments that will appease the utility regulators. I am currently modeling a close by January 31, 2016, which will equate to a net gain of 5.85% including dividends (~24% annualized).

Tuesday, November 03, 2015

CFIUS Approval for ISSI and Some Dyax

Integrated Silicon Solution (Ticker: ISSI) finally received CFIUS approval so it’s pretty much smooth sailing to the closing now. I was modeling a close by next week, but the company is now guiding for December close pending regulatory approvals from Taiwan and China. These will be rubber stamp approvals at this point. I may just close out my position as there are many attractive merger arb plays out there right now.

Yesterday, I initiated a position in Dyax (Ticker: DYAX) (~5% position) at $35.57. This company is being acquired by Shire for $37.30 in cash plus a $4.00 CVR. There is a wide spread, which can probably be attributed to (1) a potential material adverse event for a drug still in development, (2) potential acquisition of the acquirer (Shire) and (3) anti-trust concerns. The Street is probably most concerned about anti-trust. With all of these factors, you get a merger arb play with added risks. I have to size this one appropriately given all the potential risks, but I can see myself going to a 10% position at some point.