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%
January +2.80%
February +2.82%
posted by Money Turtle @ 11:16 PM
27 comments
27 Comments:
How many days does it take to receive cash payment after rendering shares of JUNO?
Thanks
The cash should hit your account by Friday at the latest. From my experience, the cash usually hits your account 1 to 3 days after closing. I've even experienced cash hitting my account the same day it closes.
Thanks. Hopefully the cash hits by tuesday and i can buy more BIVV with it
looks like Qualcomm tender offer for NXPI is going to fail? At $127 only 10% shares had been tendered and tender offer extends only till 9th Mar
NXPI: Didn't top shareholders representing more than 28% of the shares commit to tendering with the new price?
10.5% are outstanding shares and the 28% held by insiders?
I read from the press statement:
"American Stock Transfer & Trust Company, LLC, the depositary for the tender offer, has advised Qualcomm River Holdings B.V. that as of 5:00 p.m., New York City time, on March 2, 2018, the last business day prior to the announcement of the extension of the offer, 36,083,504 NXP common shares (excluding 18,439 shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee), representing approximately 10.5% of the outstanding NXP common shares, have been validly tendered pursuant to the tender offer and not properly withdrawn. Shareholders who have already tendered their common shares of NXP do not have to re-tender their shares or take any other action as a result of the extension of the expiration date of the tender offer."
The 28% were from Elliot and the gang... not from insiders.
All,
Regarding NXPI / QCOM tender offer opportunity:
NXPI has 343,644,985 common shares outstanding
As of 02-16-18 1.1% or 3,928.247 NXPI shares had been tendered. Date was extended.
On 2-20-18 QCOM raised its tender offer for NXPI to $127.50 Ca$h and NXPI accepted.
QCOM also lowered the minimum tender conditions from 80% of NXPI shares to 70%.
On 2-20-18 After NXPI price bump to $127.50 ca$h Elliott Mgmt & Soroban Capital partners both agreed to tender their shares.
Old reports have Soroban holding 4.92% or 16,683,466
and Elliott holding 4.85% or 16,437,756 NXPI common shares. Elliot Mgmt. and others collective held 28% or 96,220,596 NXPI common shares.
As of 03-02-18 10.5% or 36,083,504 NXPI shares had been tendered. Date was extended.
On 03-05-18 QCOM was scheduled to hold annual shareholder meeting and AVGO had a slate of six names up for board nominations. If AVGO selections all won, it would have provided AVGO selections a majority. CFIUS in unprecedented move, suggested QCOM postpone annual meeting until CFIUS had time to review potential (no DMA has been agreed to or in place) merger between QCOM & AVGO.
FRI 03-09-18 is next NXPI tender date expiration.
NXPI / QCOM are still waiting for MOFCOM to approve transaction. This is one major reason why the shares tendered did not go up more. Large holders generally wait for all regulatory approvals to complete before fully committing.
The second reason why Elliot & Co. plus larger institutional shareholders may be waiting is the drama leading up to the QCOM annual meeting which was postponed early Mon. morning on 03-05-18 and has been rescheduled for Thursday 04-05-18 @ 8:AM.
So AVGO CEO Hock Tan and his pursuit of QCOM is another reason why more shares had not been tendered. Lets see what happens with the next tender offer report on 03-09-18.
I am holding NXPI common shares and DITM calls waiting for the price to get closer to $127.50. In my opinion, QCOM has come to far, firmly wants NXPI technology and is fully committed to closing the NXPI deal. Outside powers at be in AVGO Hock Tan and China (MOFCOM) may have other motivations in mind.
Regards,
Inforesource7
Hi MT,
It seems that both JUNO and BIVV have stopped trading. Thank you for these successful trades. What will happen to the puts? How will it take for the broker to deem them worthless and be removed from the brokerage account?
Are you investing in other take-overs now that these are done.
Thanks
All options contracts for JUNO & BIVV will now expire on March 16 (accelerated expiration due to the deals closing). I continue to monitor MON and may initiate a position.
Hi MT,
Any decisions on MON yet? Any new insights?
Thanks
From today's news, it looks like US antitrust decision is going to require more time, which equates to more uncertainty. I'm still on the sidelines...
Hi MT,
It looks like it may be a good time to by low on MON. Why are people buying so many $130 calls when they will never expire in the money? Any insights?
Thanks
You are right, it's probably a good time to buy MON. The stock on a fundamental basis is cheap here and I don't see much downside if this deal breaks. Why people purchasing the $130 calls, I don't know...
Hi MT,
It looks like U.S. Antitrust wants more divestitures and Bayer may be willing to compromise. If so, how long will that take? Do you think the $128 deal price in danger of being lowered? Any divestitures would net cash to MON and support $128 price. Any new insights?
Thanks
From the Bloomberg article, the antitrust authorities will require more time to render a decision (analysts are talking another 3 to 6 months). I don't see a cut in the deal price as they will likely get competitive offers for any divestitures.
If the deal doesnt go through the 130 call will skyrocket
Have not seen this news published anywhere else. Could be great for QCOM / NXPI deal MOFCOM process.
Breaking News
China Premier Li Keqiang Blinks on Trade War
-widen access to market
-no longer require transfer of technology to Chinese manufacturers
-protect intellectual property
-improve access to service & manufacturing sectors
-lower import tariffs including on cancer drugs
6:08 AM - 20 Mar 2018
China Vows to Open Its Markets Further in Response to Trump’s Tariff Threats
March 20, 2018
http://www.chinafile.com/links/china-vows-open-its-markets-further-response-trumps-tariff-threats
its one thing that the premier said and its another matter that MOFCOM would really implement the new policy... MOFCOM reportedly wants more remedies from Qualcomm for the merger
one particular quirk about china is that not everything that president xi or premier li said will be implemented wholeheartedly by state departments... it is even worse in the province level... eventually though the policies got implemented but it takes time to filter down... I'm not saying China is bad but the country is too big and too many decision makers with different vested interests downstream.
China had said for many years that it will protect intellectual properties but we still see so many imitations especially in mobile phones... apple came out with the full screen notch display and now every local mobile company is launching their own full screen notch display phones barely 6 months later.
i think i mentioned this many months ago when i was thinking about whether to invest in NXPI merger. MOFCOM will be one big factor as it wants to protect local chipmakers against Qualcomm's monopoly as well as its own ambitions in autonomous car chips... They will not want Qualcomm to grab the monopoly in one of their key future tech.
Still i see MOFCOM passing the merger eventually if Qualcomm agrees to more remedies.just that it will take longer to complete.
Hi MT,
Have you heard of shareholder appraisal rights litigation for reverse mergers? Have you ever participated in a appraisal rights litigation? How long does it take? It looks like there is an effort by some RAD shareholders to join a class action appraisal rights litigation. I know you and others lost money with RAD. This looks like an opportunity to buy RAD at sub $1.50 prices now, collect the upside at the $2.50 reverse merger price and then wait out the appraisal rights litigation judgement for additional gain later. Any insights?
Thanks
Rite Aid: Shareholder Appraisal Rights For The Predatory Reverse Merger
https://seekingalpha.com/article/4158479-rite-aid-shareholder-appraisal-rights-predatory-reverse-merger
I've never participated in an Appraisal Rights for a merger. It's a drawn out process, requires significant resources and you're pretty much on your own.
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