Sunday, February 28, 2021

February 2021 Performance

My under performance continues for a second month as many of my high flyers from last year are taking a breather / correction. Like last year, I continue to be very cautious with this market by maintaining a ~ 9% cash position. My portfolio remains status quo other than the purchase of Airbnb last year. I keep looking for a market correction so I can add to my positions (especially want to buy more of Airbnb). I continue to dabble with merger arb plays and selling out of the money Puts to generate some additional income.

With the merger arb plays, I’m still in Acacia Communications, which should close in the coming week. This was one of those plays that offered an extremely compelling risk reward. All antitrust approvals were received and there is no financing concerns as you have Cisco as the acquirer. As you know I played this via short Puts. I sold as much as I could of the various dated 105 and 110 strikes. As of today, I don’t see any other interesting merger arb plays.

I’ve been focusing my naked Put selling on the weekly options on the most liquid mega cap tech companies. I usually sell the way out of the money puts (10+% out of the money). The premium is not much, but there is a very high probability of expiring worthless. This is still a risky strategy as a black swan movement will vaporize you.

So that is all for now…

 

2021 Performance = -1.51% with the running monthly returns as follows:

January -2.1%

February +0.6%

Monday, February 01, 2021

January 2021 Performance

Well, I started January with a nice little loss of 2.1%. My long holdings remained constant (Apple, Airbnb, Alibaba, Mastercard, Qiagen, Sanofi, Constellation Brands and Visa) with cash remaining at ~ 9%. Of all the companies in my portfolio, I see the biggest potential upside in Constellation Brands. The catalyst I see with Constellation Brands is the passing of a cannabis legislation to legalize use at a Federal level later this year. I really did not expect any significant legislation for several years out, but with the Democrats in control of the Senate, this may become a reality.

Now back to the merger arb space. Tiffany finally closed in January and my Short Put positions paid off nicely. I just initiated a position in Acacia Communications, which is being acquired by Cisco for $115 in cash. All antitrust approvals have been received so it’s just a waiting game for the shareholder vote. I’m playing Acacia via Short Puts.

Even though it’s a new year, I’m going to follow my same old strategy of holding strong to my long positions and supplementing additional income from the merger arb plays & selling way out of the money options.

That is all for now…

2021 Performance = -2.1% with the running monthly returns as follows:

January -2.1%