Friday, November 02, 2018

October 2018 Performance

October was simply an awful month with my portfolio generating a net loss of 8.78%. Nothing worked for me at all and I have to admit that my confidence was shaken a bit. I had a decent position in CA Technologies with short Puts and I fell for the fraudulent memo leak by closing out my position at a nice loss. I decided it was time regroup by going small and to slowly rebuild my confidence.

So onto my merger arb plays. I closed out my position in SodaStream (short Puts) for a small gain. I initiated small positions in Café Press and Senomyx. These were microcap companies and it was extremely difficult to build a decent position. I only managed to build a small position in both of these companies. Senomyx actually closed today and Café Press should close next week. I like these microcap merger plays as they often fall under the radar and can offer decent annualized returns with a quick closing (both of these were structured as tender offers).
Today, I initiated a small starter position in Pacific Biosciences via Short Puts. Pacific Biosciences is being acquired by Illumina for $8.00 per share in cash. Pacific Biosciences is currently trading at ~ $7.50, which gives you a gross spread of ~ 6% (~12% annualized return based on a closing in 6 months). I don’t see much of a regulatory risk in this deal as Pacific Biosciences is essentially a tiny fish in the sequencing space. The big players are Illumina and Life Technologies (Ion Torrent and Applied Biosystems).
I have not done much with my long positions (Apple, Alibaba, Constellation Brands, MasterCard, Qiagen, Sanofi and Visa). I continue to add to my Constellation Brands position with this recent decline. Their Q2 earnings were impressive as beer, spirits and even wine performed well. I am starting to become more bullish with their stake in Canopy Growth and the enormous market this can represent.

Hoping to just end the year green at this point!

2018 Performance = +10.92% with the running monthly returns as follows:

January +2.80%
February +2.82%
March -0.03%
April +2.10%
May +6.25%
June -1.51%
July +1.53%
August +5.1%
September -0.60%
October -8.78%