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%

9 Comments:

At February 02, 2021, Anonymous Anonymous said...

Hello MT,

I have a stupid question. Is there anything wrong with selling ACIA $115 strike PUTs?
They will expire OTM if the deal is approved and earn a higher premium. Nothing like trading on the edge.

Thanks

 
At February 02, 2021, Blogger Money Turtle said...

There is always a chance that you could get assigned with the $115 Puts. Maybe worth it if you can get a decent premium. I'm selling the $105 and $110 Puts.

 
At February 09, 2021, Anonymous Anonymous said...

MT,
Thanks for the insights on STZ and ABNB.

 
At February 11, 2021, Anonymous Anonymous said...

Hi MT,

With all the turmoil in the Canabis stocks, is there a safe way to play the TLRY/APHA merger arbitrage. It seems like a potential huge opportunity to buy TLRY at a very steep discount to the current price.

https://www.fool.com/investing/2021/02/10/aphria-is-becoming-the-stock-markets-biggest-merge/

Your insights are always appreciated

 
At February 11, 2021, Anonymous Anonymous said...

Another article on the arbitrage
https://seekingalpha.com/article/4404265-tilray-aphria-30-merger-arbitrage-is-tough-to-play

 
At February 11, 2021, Blogger Money Turtle said...

I haven't looked into this deal as I usually avoid stock deals, but this does look like an interesting opportunity. Not sure how easy it is to borrow TLRY to short and it's borrow rate.

 
At February 11, 2021, Anonymous Anonymous said...

IBKR has 54,338 shares of TLRY to short at 17.63% if it helps.

 
At February 12, 2021, Anonymous Anonymous said...

Perhaps it can be done with options, although premiums are very high.

 
At February 12, 2021, Blogger Money Turtle said...

I'm personally not playing this as something just doesn't feel right to me.
But if I were to play, I would simply just go short TLRY and long APHA. There have been blowups in this space so need to be careful.

 

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