2017 Performance

It’s that time once again to review the good and the bad in 2017… I like to review the “bad” first. The bad can be summarized in the overall performance of the merger arb / special situations plays, which contributed a whopping +0.2% performance to the overall results. What happened? Well, I got bitten by the Rite-Aid (Ticker: RAD) curse in January and paid dearly for it. It was pretty much an uphill battle from January to the end of the year in recouping the Rite-Aid losses. I went in way too big in Rite-Aid and it blew up in my face… If it wasn’t for Wafergen Bio-Systems, Syngenta and Actellion I would still be sitting on some heavy losses from the merger arb / special situation plays. I think Rite-Aid has scarred me a bit as I seem to be more reluctant these days to pull the trigger on many merger arb / special situation plays. Am I too old to be playing this game?

Now the “good”... I can thank my holdings in Constellation Brands (Ticker: STZ), Visa (Ticker: V), Apple (Ticker: AAPL) and Mastercard (Ticker: MA), which all returned over 40% and Alibaba (Ticker: BABA) returning over 90% for my overall performance in 2017. I’m just amazed how these mega caps were able to generate this type of market beating return. Looking back in 2016, these stocks basically did nothing and it was the merger arb / special situation plays that bailed me out. Do I expect this type of return to continue for these mega caps in 2018? No… if these stocks can return 10% in 2018, I’ll be really pleased.

So what in 2018? Right now I only have two relatively safe merger arb plays: Buffalo Wild Wings (Ticker: BWLD) and Ignyta (Ticker: RXDX). I am playing both of these via long dated short Puts and anticipate both of these deals to close in February. I continue to be cautious in this market and currently have a ~ 12% cash position. I have to get back into the groove with the merger arb / special situation plays to generate some alpha if I seriously want a chance at beating this market.

So I guess that’s wrap for 2017!


2017 Performance = +42.12% with the running monthly returns as follows:

January -4.50%
February +10.18%
March +5.1%
April +4.34%
May +5.67%
June +1.34%
July +2.76%
August +4.81%
September +0.48%
October +6.57%
November +0.1%
December -0.37%

Annual performance for the past six years is as follows:

2012 +61%
2013 +44.61%
2014 +29.47%
2015 +33.48%
2016 +14.61%
2017 +42.12%