Special Situations Real Money Portfolio November 2008 Update

The Special Situations Real Money Portfolio held up pretty well in the volatile month of November. I had one minor setback this month, but was still able to end the month with an account balance of $17,914.97. That’s down only 3.2% since October. My return since the beginning of the year is still a positive 12.32% as of the market close on November 28th. Finally, going all the way back to the inception of the Special Situations Real Money Portfolio on October 19, 2004, my total return for this portfolio at the end of November is 79.15%, which comes out to a positive 22.86% internal rate of return.

As I first mentioned above, the Special Situations Port did run into a bad deal in November. Capital Properties (CPI) cancelled their going private transaction. Thankfully, I was able to react quickly to the news and sell for just a minor loss of $21.31. This minor setback was more than offset by the big win on my Anheuser Busch merger arbitrage play. That one netted the portfolio $690.05, a 10.9% total return for that position.

As the month came to a close, I started on a streak of bad luck, or maybe you could say my luck ran out. Just before Thanksgiving, new broke that the accountant’s preliminary review of BCE Inc. (BCE) has found the proposed acquisition may not meet solvency requirements. Basically the BCE takeover deal looked dead in the water and the stock dropped from just above $30 to the $18-$19 range. My plans for now are to hold onto BCE until more definitive information comes out about the fate of the deal. The company has been holding back its dividend and if the deal is called off it might likely restart its dividend and maybe even issue a special dividend.

Sadly, BCE is not the end of the Special Situations Real Money Portfolio bad news. But that will have to wait for another post, since the next piece of bad news hit on December 1st. If you would like to learn about that trade early and also review all the current “workout” opportunities that I’m tracking, please consider subscribing to Fat Pitch Financials Contributors Corner.

Disclosure: I own shares of BCE. I no longer own shares of CPI or Anheuser Busch.

6 thoughts on “Special Situations Real Money Portfolio November 2008 Update

  • December 3, 2008 at 8:49 am
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    bet your loving CEG right now with the new bid. Nice play

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  • December 3, 2008 at 9:09 am
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    @Mark I am loving it. In fact, I was just writing a post about Constellation Energy Group as you left this comment.

    @Dividend Growth Investor I think the BCE is not that likely to go through at this time. I’m now hoping for a fat special dividend to help make up the losses.

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  • December 17, 2008 at 11:36 pm
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    I just stumbled across this blog in a search for special situations investing.

    I appreciate an account of your activities.

    I’m about to open a special situations portfolio myself (probably only $5,000 at first since this has been a rough year). I’ve been trying to familiarize myself with EDGAR and have a few Going Private transactions and tender offers I’m looking at.

    Just bought a few shares of KATY.OB to play with as there’s a going private 500-1 reverse stock split with all shares less than 500 being cashed out at $2. (If it all plays out right…always a risk.) Anyway, I thought this could be a good place to start as I figure my way around.

    I watched SFPI.PK turn what I thought would be a 30% spread into a 200% gain as the tender offer was doubled. Sadly I was only watching and didn’t buy any shares of that particular play.

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