Thursday, January 02, 2020

2019 Year End Review

I was expecting 2019 to a be flattish to down year based on the market action in the end of 2018. I maintained a conservative stance with ~ 15% cash through the year. I did not expect to generate a ~ 40% return in 2019. It was a buy and hold year with no changes to my holdings. I did take advantage of some merger arb plays, which contributed to ~ 6.25% of the total returns. I was able to generate some alpha from the merger arb plays. All in all, I was very pleased with this performance and hopefully I can continue to generate positive returns in the future.

So, what worked in the long portfolio… Apple (Ticker: AAPL), Alibaba (Ticker: BABA), Mastercard (Ticker: MA) and Visa (Ticker: V) generated market beating performance. Apple’s performance just blew me away, which was a nice surprise. The laggards in my portfolio were Qiagen (Ticker: QGEN), Sanofi (Ticker: SNY) and Constellation Brands (Ticker: STZ). Hopefully, these laggards will make a comeback in the new year. I currently have no plans to make any changes to this portfolio.

Moving onto the merger arb space. There were just three arb plays that contributed to most of the returns in this space. The companies were Loxo Oncology, Spark Therapeutics and Tesaro. Tesaro was the biggest contributor and got me in a big bind. I went big in Tesaro with common and short Puts. After building my position in Tesaro, my broker suddenly decided that my position was too much of risk for them and had reached the “Point of No Return”. I had to close out a bunch of the options positions at the last minute, which cost me some $$$. I was not pleased as they waited awhile before issuing this margin call (long after building up the position). So maybe time to look for a new broker in the new year.

In 2020, I’ll continue to maintain this conservative tilt with a cash position of ~15%. I don’t see much value in this market except for the energy sector. I’ve always been intrigued with the oil services sector as you are starting to see some going bankrupt. Maybe a good time to nibble on some of the potential survivors. I don’t care what people say, but we’ll always need oil.

I guess that is it for my 2019 review. It’s boring as not many trades were executed. Hopefully, I’ll come up with some profitable ideas in 2020.

As always… Have a Healthy and Prosperous New Year!

2019 Performance = +40.17% with the running monthly returns as follows:

January +7.4%
February +3.7%
March +5.06%
April +7.15%
May -7.90%
June +8.2%
July +1.53%
August +1.88%
September +1.00%
October +1.12%
November +4.75%
December +2.9%

Annual performance for the past eight years is as follows:

2012 +61%
2013 +44.61%
2014 +29.47%
2015 +33.48%
2016 +14.61%
2017 +42.12%
2018 -4.11%
2019 +40.17%

CAGR from 2012 to 2019 = 31.26%


At January 17, 2020, Anonymous Anonymous said...

QGEN for sale again.

At January 19, 2020, Blogger Money Turtle said...

QGEN: It's certainly been a roller coaster ride. I'll be interesting to see how it turns it this time.

At February 02, 2020, Anonymous Anonymous said...

RETA in AMGN crosshairs or just price pumping?

At February 02, 2020, Blogger Money Turtle said...

I don't know about RETA. It looks like the source was an analyst suggesting that RETA would be an ideal acquisition for AMGN. I would have expected a more reliable news source such as Bloomberg, Reuters or WSJ to break this news if something was in the works.

At February 03, 2020, Anonymous Anonymous said...

Good point MT. The following article on AMGN CEO earnings call comments most likely the driver of the rumor / speculation. I am sure you have heard the old saying, "It's all about the economy, stupid." Well in this case, "It's all about the headlines, stupid." as we all well know.

Reata Pharma Soars on Amgen Takeover Rumor
Reata Pharmaceuticals soars Friday on rumors the company could be targeted by Amgen.
Rob Lenihan Jan 31, 2020 1:22 PM EST


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