May 2020 Performance

What a wacky market… It just feels weird that I am now up for the year after experiencing the declines in March. Do I feel the rise in the market is justified? Nope, but I’ll go for the ride for now. My cash position is ~15% and will probably rise.

There were no major changes in my portfolio other than trimming about half my position in Qiagen. I’m hanging on to my remaining position in anticipation of a bump in price. I have no intention of tendering my remaining shares at the current price of 39 euros from Thermo Fisher. I have a feeling that a good number of shareholders will also not tender at the current price.

I did play with some merger arbs such as SORL Autoparts, Mellanox Technologies and Stemline Therapeutics. SORL and Mellanox closed as expected. It took forever to receive the cash from the Mellanox deal, which negatively impacted the annualized rate of return. Mellanox is an Israel based company, so you need to submit documentation to show that you are a US resident to avoid the 25% withholding tax. Next time dump any Israel based company prior to closing to avoid this headache. Finally, I played Stemline via short Puts and recently closed out the position with a small gain. As of today, I have no merger arb positions.

As I’ve been saying for a while, I remain cautious with this market. Nothing is cheap right now. I’ll continue to play it “safe” with merger arb plays for the time being, but you have to be careful as many acquirors are motivated to walk from deals in this economic environment.

I guess that’s it. Stay safe…

2020 YTD Performance = +3.2% with the running monthly returns as follows:

January +2.7%
February -6.8%
March -9.9%

April +12.3%

May +6.6%

April 2020 Performance

A nice rebound in April, but I continue to be cautious with the market as I don’t see any good values. I still have a relatively high a cash position of ~ 15% and that will increase when Qiagen (Ticker: QGEN) closes (assuming that it will close in the first half of 2021). I just don’t see a snap back recovery as many small businesses will not re-open. There’s a small mom & pop coffee shop around here that has gone out of business. It’ll be interesting to see how many small businesses are able to survive this pandemic. It’s these small businesses that make up a good chunk of the US economy.

I‘ve been nibbling at some merger arb plays. My latest is SORL Auto Parts, Inc (Ticker: SORL). It’s another one of those China going private situations. I have a small position (less than 2% of my holding) for the time being. The shareholder vote is May 8^th and assuming the majority votes in favor, this deal should close soon after with shareholders receiving $4.72 in cash per share.

We’ll see what the remainder of the year brings. Hopefully, no more negative surprises…

2020 YTD Performance = -3.2% with the running monthly returns as follows:

January +2.7%
February -6.8%
March -9.9%

April +12.3%