May 2018 Performance

The strong performance in May can be primarily attributed to the closing of AveXis, which was successfully acquired by Novartis (Ticker: NVS). I played this deal aggressively via common stock and short Puts. This deal took only 37 days to close, which was one of the quickest closings that I can recall. I had a strong conviction in this deal closing and talk of potential antitrust delays provided a nice risk reward opportunity.

The following stocks were also positive contributors in May: Apple (Ticker: AAPL), Alibaba (Ticker: BABA), Mastercard (Ticker: MA), Qiagen (Ticker: QGEN) and Visa (Ticker: V). On the other hand Sanofi (Ticker: SNY) and Constellation Brands (Ticker: STZ) dragged down the May performance. As I have mentioned before, I remain cautious with this market and have a ~ 18% cash position.

I’m really late to the game with Monsanto (Ticker: MON), but I’ve been selling a few of the longer dated Puts. It’s not much of a premium, but it’s pretty much a risk free play at this point. Ideally, Monsanto closes by mid-June in time for the June options expiration (accelerated expiration). The more likely scenario is that these long dated options will expire in July expiration with the assumption that Monsanto closes by the end of June.

That’s about it for the May recap…    

2018 Performance = +14.62% with the running monthly returns as follows:

January +2.80%

February +2.82%

March -0.03%

April +2.10%

May +6.25%

April 2018 Performance

April turned out surprisingly well considering the market volatility. The following growth stocks: Mastercard (Ticker: MA), Visa (Ticker: V) and Constellation Brands (Ticker: STZ) contributed to some positive gains for the month. The big gain came from Avexis (Ticker: AVXS), which is being acquired by Novartis (Ticker: NVS) for $218 in cash. I have a good size position in Avexis via common stock and short puts. I did get a bit overboard and the size of the position went past my comfort zone. I plan on tendering the common and letting the short Puts expire. This was one of those situations where I liked the odds and went pretty much all in. I’m hopeful the tender closes on May14th.

I’m hoping to see a few more pharma / biotech tender plays. It’s really been an interesting year as the majority of my gains this year were derived from merger arb plays. My goal is to focus on high probability merger plays and hoping to avoid any Rite-Aid like disasters (which I had the pleasure of experiencing last year). So I’m basically taking things slow and steady…

2018 Performance = +7.89% with the running monthly returns as follows:

January +2.80%

February +2.82%

March -0.03%

April +2.10%