Saturday, October 31, 2020

October 2020 Performance

I guess October is one of those typical months where you give back one’s gains. My long positions didn’t fair well as it declined with the market. What saved me somewhat was the merger arb opportunities out there. I took advantage of several in October and they all paid off nicely. My current portfolio allocation is 85% equities and 15% cash, which is fairly consistent for much of the year.

Let’s get into the merger arb plays… (1) I entered a Short Put position in Aimmune Therapeutics. I went in big after they received HSR approval. The puts still had a fairly decent premium as the company was waiting for German antitrust approval. Nestle also owned a big chunk of Aimmune Therapeutics stock so meeting the minimum tender threshold was a certainty. This was one of those plays where the odds of closing were so favorable that it was literally free money in my book. (2) I played Immunomedics via Short Puts and Long Common. This one has a nice spread, which I still couldn’t figure out. I couldn’t go too big in this one as most of my margin money was tied up in Aimmune. (3) Finally, Tiffany… I play this one with Short Puts when news leaked that Tiffany and LVMH had agreed to a lower price. I still have some November Short Puts in Tiffany. I’m still looking to add some Short Puts and / or Long Common. The probably of this deal breaking is literally 0% with this updated merger agreement.

I’ll continue to play it safe by focusing on merger arb plays. This is were I am able to generate some decent income in the face of a 0% interest environment. Just trying to survive in this crazy market…  

2020 YTD Performance = +13.6% with the running monthly returns as follows:

January +2.7%
February -6.8%
March -9.9%
April +12.3%
May +6.6%
June +3.8%
July +6.1%
August +11.8%
September -4.2%

October -6.7%


At November 14, 2020, Anonymous Anonymous said...

BABA: That must have been crazy by President XI to pull the plug on Ant financial. Hopefully they can clear out their differences and Ant can go public.

At November 14, 2020, Blogger Money Turtle said...

That was definitely a shocker. I still like Ant's potential, but the IPO looks to be delayed at least 6 months to a year. I'll probably add to Alibaba if it continues to sell off on this Ant news.

At November 20, 2020, Anonymous Anonymous said...

Any other merger arb after AIMT and MYOK. thanks

At November 23, 2020, Blogger Money Turtle said...

I'm just nibbling at some Tiffany Short Puts. Not much of a premium, but it's still safe income.


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