Special Situations Real Money Portfolio November 2010 Update

Tuesday, February 1st, 2011 | Special Situations Real Money Portfolio with 3 Comments

The Special Situations Real Money Portfolio ended the month of November with a balance of $37,354.81.  That’s down 3.9% since I reported on the Special Situations Real Money Portfolio October 2010 closing balance.

As you probably recall, the Special Situations Real Money Portfolio is actually my son’s Coverdell Education Savings Account that I set up on October 19, 2004 as an experiment. I wanted to see if an individual investor could earn stable returns from special situations and arbitrage opportunities similar to the opportunities Benjamin Graham called “stock workouts.” The experiment has been a huge success and was the motivation for me to create my premium service, Fat Pitch Financials Contributors Corner. It also inspired me to launch a Workouts model at Covestor this past month.

Year-to-date the Special Situations Port is up 20.74% as of the market close on November 30, 2010.  That is still dramatically better than the S&P 500 return over the same period. Over the long run, I expect the Special Situations Real Money Portfolio to continue to outperform.

Since the inception of this portfolio, my total return is now 211.29% as of the end of the third quarter of 2010. The compound annual growth rate for the Special Situations Real Money Portfolio is a rock solid 29.20%, and it has been around this number for many months now.

In November, I sold 2,000 shares of Presidential Realty Corp. B (PDL.B) for $2.20 per share. I originally bought these shares on September 1, 2010 for $1.80 because the company plans to liquidate its assets, which the company valued at approximately $2.25 per share. I netted $706.03 on that trade, which comes to a 21.74% return.

On November 12, 2010, I was also cashed out of the 700 shares of Alloy Inc. (ALOY) that I held in this portfolio when ZelnickMedia completed its merger with Alloy. I originally picked up those shares for $9.48 per share on August 11, 2010.  That netted me $217.05, which comes out to a 3.27% return.

On November 15th, I sold half my position in China Techfaith Wireless (CNTF) at $4.15 per share.  I originally bought shares on this company on July 23, 2010 at $3.00 per share.  I bought those shares based on the fact that China Techfaith was trading at less than two thirds of its net asset value at the time. That trade generated just over a 38% return.

Finally on November 29, 2010, I was cashed out of the 500 shares of Bowne & Co Inc (BNE) held in the Special Situations Real Money Portfolio when this merger opportunity was cashed out at $11.50 per share. I also received a dividend on November 16th. I bought those 500 shares on September 30, 2010 for  $11.32. My net return on this position was 2.2%.

I also bought a new position in a tender offer opportunity and I added to merger arbitrage position. However, I still had $14,020.02 in cash to use in case any other new opportunities became available. To learn about those new stocks and all my past trades consider subscribing to the Fat Pitch Financials Contributors Corner premium service.


Comments

  • Hi, Are you buying back into Presidential Realty now that the stock is trading around $1.70? I think they recently adjusted their net asset value estimate to $2.00 per share.

    tom February 12th, 2011 at 2:58 pm
  • Yes, I’ve bought back into Presidential Realty. They did adjust their net asset value down to $2.00 per share. I guess the real estate market has been weaker than they anticipated.

    George February 12th, 2011 at 4:41 pm

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