The Special Situations Real Money Portfolio ended the month of January up 0.38%. The closing balance at the market close on January 29, 2010 was $31,057.05. That’s up slightly from the end of 2009 balance for the Special Situations Real Money Portfolio of $30,938.09.
Since the portfolio’s inception on October 19, 2004, my total return at the end of January 2010 was 158.8%. The average annualized rate of return has been an impressive 30.12%
The main development at the end of January was the increase in cash in the portfolio. My cash position has increased to $22,196.00. That’s primarily due to two reasons. First, I was cashed out of my large position in Sun Microsystems and my small position in MAXXAM. Second, there haven’t been too many good opportunities to redeploy cash.
Back on December 14, 2009, I bought 210 shares of MAXXAM (MXM) at $10.45 per share. MAXXAM planned to go private via a reverse/forward stock split. Shareholders with less than 250 shares would be cashed out for $11.00 per share. I was cashed out on January 22, 2010 and I received $2,310 for my 210 shares. My net profit on that transaction came to $108.55. The return was 4.93% for that 40 day transaction. I estimated the average annualized rate of return for this transaction to be 45%.
I was also cashed out of the 1,000 shares of Sun Microsystems (JAVA) in the Special Situations Real Money Portfolio on January 28, 2010. I purchased shares of Sun Microsystems on multiple occasions. First, I bought shares of Sun Microsystems October 2, 2009. I picked up a 1,000 shares for $9.01 on that trade. Second, I bought 600 shares of Sun on October 23, 2009 for $8.40 per share. I went on to sell those 600 shares for $9.23 per share on December 14, 2009. In total, I made $967.00 on all these trades. That cames to a 6.88% return. Looking at the internal rate of return over all those trades, I calculate an annualized rate of return of 29.54%. That’s pretty good for a simple merger arbitrage play with no leverage.
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Disclosure: I no longer own shares of Sun Microsystems (JAVA) or MAXXAM (MXM).