The Special Situations Real Money Portfolio is actually a Coverdell Educational Savings Account I started in October of 2004. My goal has been to only invest in special situation opportunities in this account as an experiment on whether individual investors can benefit from this unique segment of the market. These opportunities have included going private transactions, odd-lot tender offers, spinoffs, rights offerings, and split offs.
In February, I bought 200 additional shares of Sally Beauty Holdings (SBH) for $7.40 per share. This is in addition to the 300 other shares I already owned. I saw no reason for Sally Beauty Holdings to trade down below $8 this month, so I decided to add to my position. I still believe this spinoff is worth at least more than $10 per share. Hopefully, the market will eventually start to agree with me in the near future.
I’ve been worried lately about style drift in this portfolio. Since Western Sizzlin (WEST) was added to the NASDAQ this month, I will likely sell this position shortly in this portfolio because the special situation (transfer to a major exchange) is now over for this stock. I’ve also been watching several other special situation opportunities closely and will likely add a new position shortly. You can follow my research and current holdings by subscribing to Fat Pitch Financials Contributor’s Corner.
The Special Situations Real Money Portfolio ended the month was $15,326.04. This is down slightly from January’s portfolio balance of $15,547.14. Year-to-date the portfolio is down 3.91%. However, I’m still maintaining a 22.8% internal rate of return since inception.