February 2018 Performance

February was slow and steady for me as the merger arb plays generated positive returns, which helped to buffer the decline in the growth stocks. The good news is that Buffalo Wild Wings and Ignyta closed in February. Antitrust approvals were received for Bioverativ (Ticker: BIVV) and Juno Therapeutics (Ticker: JUNO). As you know I am very heavy in both of those deals via short Puts and anticipate both deals to close shortly. And finally received the cash from the Casa Ley CVRs.

I continue to tread this market with caution and will focus on merger arb plays as a conservative strategy with this market volatility. Some may view merger arb as a high risk strategy comparing it to picking up pennies in front of a steam roller. The odds are really in your favor when playing the merger arb game as the majority of the deals do close. You can usually identify the hairy deals early on and position those based on your risk tolerance. I do avoid anything that requires CFIUS approval as this agency has become more active in rejecting foreign deals.

I'm just going to sit back and wait for some more good risk / reward arb plays to show up. Just need to be patient…

2018 Performance = +5.70% with the running monthly returns as follows:

January +2.80%

February +2.82%

January 2018 Performance

I can’t believe January has already come and gone… The market strength just amazes me with the S&P 500 gaining ~ 5.5% just in January. My return for January was much more muted with a gain of 2.8%. I continue to have a high cash position of ~ 14% as I remain cautious in this market environment. I just sense that there’s too much optimism out there. In any case, I’m comfortable with my current cash position and will deploy when opportunities arise.

It’s definitely been a busy with all of the M&A activity in the recent weeks. I initiated positions in several arb plays (via Short Puts): Buffalo Wild Wings (Ticker: BWLD), Ignyta (Ticker: RXDX), Bioverativ (Ticker: BIVV) and Juno Therapeutics (Ticker: JUNO). Buffalo Wild Wings and Ignyta are expected to close next week. Bioverativ and Juno Therapeutics should both close by the end of Q1. I really like the risk / reward on both Bioverativ & Juno Therapeutics and have large positions in both.  Bioverativ and Juno Therapeutics are both structured as tender offers, which should lead to a quick close as long as there are no hiccups.

That’s it, just looking forward in seeing Buffalo Wild Wings and Ignyta close next week…

2018 Performance = +2.80% with the running monthly returns as follows:

January +2.80%