Back in Baxtala
What a start to the new year… I’m back in Baxtala (Ticker: BXLT) (~ 4% position) at $39.98. With news out over the weekend on advanced merger discussions with Shire (Ticker: SHPG), I would have thought that Baxtala would be up more than it is right now. I sold my position in Regeneron (Ticker: REGN) (generating a net gain of 2.22%) to raise some cash for the Baxtala purchase. In this environment, it’s nice to have some merger arb plays to buffer the market volatility.
posted by Money Turtle @ 12:51 PM
11 comments
11 Comments:
is attracting me this your idea about BXLT...
what to do to play it aggrassively via options, and minimize the risk near to zero ? :)
I'm just simply playing this with equity. No options play on this one yet...
hmm understand so which could be the perfect size in % of portfolio if I'm 100% cash let's say, and risk of loss in % and profit in % with estimated price of the deal? (46.5/48 USD per share?)
The deal will take time to close if announced and it won't trade for that price until then, guessing 9 months to close
good to know, if will last 4/6 months or so, may be better to wait and trade just to deal announced correct?
do you see regulatory/antitrust issues that could stop the deal? or other risks?
FCS bidding war what do you think? could arrive another bid?
Sizing a position really depends on your risk profile. I typically start off with a 3-5% position and see how it develops. With high conviction plays, I've gone up to 40-50% position, but that is very rare. I'm comfortable with a 10% position in most cases. I think an eventual deal will be struck at the high end of the price talk range.
I agree with Retire@60 that this deal will likely take 6 to 9 months to close. Once / if a deal is announced, you'll need to determine the annualized return to see if it is worth the wait. Baxalta also pays a dividend so something to consider when calculating the annualized return. I don't see any regulatory risk in this deal.
FCS: I can see ON Semiconductor bump their price a bit, but I see the Chinese consortium ultimately getting FCS. I worry a bit about the CFIUS review with this one.
pcp eu approval, when deal close?
PCP: I haven't followed this one. The company guided for Q1 close so if I were to guess probably sometime in February depending on the anti trust approvals left from the foreign jurisdictions (whoever is left???).
Hi MT,
There was a recent article on the thestreet.com attempting to explain todays price decline.
http://www.thestreet.com/story/13414899/1/why-baxalta-bxlt-stock-is-down-today.html?puc=yahoo&cm_ven=YAHOO
Based on the Financial Times: It "depends on whether it can pay for a large portion of the deal in cash without prompting a big tax bill"
What do you think?
I believe Shire will figure out a way to get this deal done.
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