Sunday, October 02, 2016

September 2016 Performance

September was all about Medivation, Medivation and Medivation. I went in big on Medivation by going long the stock and short Puts. Fortunately, everything went as planned as this deal closed on 9/27. A bit annoyed that I am still waiting for the cash to hit my account. I had modeled the cash to hit my account by September 30th (It now looks like it will hit my account on 10/3).

One arb play that has consistently given me a headache is Rite-Aid (Ticker: RAD). This is one that I never seem to get right. I’m currently out of the position after getting shaken out for the third time. I think Rite-Aid is just not meant for me!

I’ve closed out my remaining arb plays such as Virgin America (Ticker: VA) for the time being. It’s been such a good year that I just don’t want to start forcing trades. Although, I am keeping a very close eye on LinkedIn (Ticker: LNKD) and believe that this deal has a good shot at closing by year end.

I’m planning on taking it a bit easy for the remainder of the year.

Well, that’s what I say now…

2016 Performance Year to Date = +24.86% with the running monthly returns as follows:

January -5.47%
February -3.50%
March +7.51%
April +0.84%
May +6.34%
June -2.6%
July +12.2%
August +6.57%
September +1.94%


At October 02, 2016, Anonymous Anonymous said...

If you were to jump into LinkedIn, how would you play it (e.g., long stock, short puts)? What price point looks interesting to you?

At October 03, 2016, Blogger lamano said...

I think VA looks interesting, although I do see the risk with the increased FTC/DOJ scrutiny as of late. I think the deal makes sense from a business point of view. They both are relatively small players nationwide, although they do have significant share in some markets. I guess Southwest can still bring the low-cost competition on routes where Virgin will no longer competes. I would guess they have to give up some slots to them...

So on the one hand I don't see how they could veto the deal (assuming they would be willing to give up some slots where they have a lot of overlap) given their largely complementary routes. On the other hand, taking out Virgin, would reduce competition amongst the low-cost airlines like southwest/Virgin. However, veto-ing the deal for those reasons would basically mean that Virgin/Southwest can never be acquired by anyone...

Anything specific why you decided to close it out? I set it up as a (small) position

At October 03, 2016, Anonymous Anonymous said...

what about CAB cabelas now? do you see big risk of antitrust because are the biggest two? was this just a good play before the announcement, or do you see a chance to sell puts or play the common stock?

At October 03, 2016, Blogger Money Turtle said...

LNKD: I would do long common and short Puts, but it's really up to your risk tolerance.

VA: I sold to book some gains. I agree, it shouldn't be blocked. I'll probably re-enter again...

CAB: I see no anti-trust issues. I missed this one. Surprised by the big premium.

At October 03, 2016, Blogger lamano said...

Cab: You expect no antitrust issues due their lack of overlap?

I sold today, Timeline + some jitters about #1 and #2 in their market teaming up...4% spread is not attractive enough for me. Given the premium and superlong selling process I expect the chances of a higher bid to be slim.

At October 04, 2016, Anonymous Anonymous said...

just arrived: Microsoft Could File for EC Approval of LinkedIn Acquisition Shortly

At October 05, 2016, Anonymous Anonymous said...

Hi MT,

STZ: Thanks for this gem. I know you in the long run but what consists your exit strategy or trimming positions?

CAB: patience finally paid off on DEC 50/60/65c butterfly spread.

DEPO: somewhat similar to MDVN. Starboard Value is trying to replace the entire board. Today DR reported of company signing NDA with AGN TEVA HZNP TAKEDA PURDUE DAIICHI bidding. We might hear more before NOV 15 meeting. Started 10% position and I will buy more if it dips.


At October 05, 2016, Blogger stocktrader07 said...

FWIW, RAD filed 10-Q on 10-4 and said deal is expected to close this year.

At October 06, 2016, Blogger Money Turtle said...

stocktrader07: Thanks for the update on RAD.

At October 06, 2016, Anonymous Anonymous said...

there is some website that list all the stocks with rumors like MDVN, DEPO, CAB to take care of thos special situations/rumors etc? because it's hard to handle it. CAB was a nice and easy one and we missed here. :( While MDVN I missed to because there is luck of some sort of information organized well to take care of all the possible opportunities in this strategy.

At October 06, 2016, Anonymous Anonymous said...

The reliable ones are Bloomberg/Reuters Deals/ CNBC Mark Faber / Deal Reporter and sometimes FT/NIKKEI for mergers..
You can always buy some puts for protection. (In the end the only the insiders know if the deal will go through or not) buy puts to protect most of your initial investment.

At October 06, 2016, Anonymous Anonymous said...

Also, IMPV bids maybe due this week, OCT 50p provides a good protection with CSCO IBM and AKAM reported bidders two weeks ago

At October 07, 2016, Blogger stocktrader07 said...

RAD: FTC comments on competitiveness seems to have sunk RAD in the past few days. As far as I see, there is plenty of competition in this space and so long as the divestiture goes forward, don't see a reason for the deal not to close.

At October 11, 2016, Anonymous Anonymous said...

what happened to LXK? what revised deal?

At October 12, 2016, Blogger Money Turtle said...

Haven't heard anything about a revised deal for LXK.

At October 12, 2016, Anonymous Anonymous said...

Lexmark (LXK) Sees Pressure as Apex Said to Defer Safe Filing
Lexmark (NYSE: LXK) lower on reports from DealReporter suitor Apex will defer safe filing until holders ok revised sponsor deal.
Tue, 11 Oct 2016 12:28:45 -0400
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