When I last reported on the Special Situations Real Money Portfolio in April, the portfolio had a balance of $34,683.37. By then end of May 2010, the portfolio’s value increased to $35,026.44.  After the market closed on August 31, 2010, the portfolio has grown to $37,421.88.  That’s a gain of 7.9% since the end of April.

So far this year, the Special Situations Real Money Portfolio has gained 20.96%.  That is particularly impressive given that the S&P 500 index returned -4.6% over the same period.

Since inception on October 19, 2004, the Special Situations Real Money Portfolio has produced a total return of 211.85% (as of August 31, 2010).  The average annualized rate of return for this portfolio continues to be an impressive 31.09%.  This is just slightly lower than what I reported at the end of April.

Of the current $37,421.88 in the portfolio, I only held $3,805.31 in cash at the end of August. Yesterday, I invested almost all of that remaining cash in a new liquidation opportunity that I recently shared with subscribers of Fat Pitch Financials Contributor’s Corner. Find out my latest move by subscribing to a one year membership of Fat Pitch Financials Contributors Corner. Use the coupon code FPF10 to get $10 off an annual subscription purchased by September 3, 2010.

Over the next few days I will be detailing the results of all my recent trades that have resulted in my current 21% gain so far this year.  Stay tuned by following the Fat Pitch Financials RSS feed or signing up for free email notification.

So far this year, the Special Situations Real Money Portfolio is up 12.11% year-to-date. That is 5% better than the S&P 500 year-to-date return of 7.05%. Overall, the portfolio is up 189.03% since inception on October 19, 2004. The internal rate of return or average annualized rate of return is still an impressive 31.51%.

Let me bring you up to speed on the transactions that took place in the Special Situations Real Money Port this past month. First, I finally received on April 5, 2010 the debentures for the shares of Western Sizzlin held in the portfolio. In total, I received 3,228 Steak N Shake debentures. However, that was rounded down to an even 3,000 debentures, and I received $8.07 per share for the 228 “baby debentures” held in the portfolio. On April 20, the debentures were renamed to Biglari Holdings Inc. Redeemable Sub. Deb. to reflect the name change of Steak N Shake (SNS) to Biglari Holdings (BH).

On April 12, 2010, I was cashed out of my 3COM (COMS) holdings. I held 400 shares of 3COM that I purchased on November 19, 2009 for $7.45 per share. Those 400 shares were cashed out for $7.90 per share. I made a net return of 5.79% on that investment. Considering that investment took 145, my average annualized rate of return on this investment is about 14.6%. That’s a pretty nice return for an unleveraged risk arbitrage trade. That same day I picked up shares of 500 shares of another company undergoing a merger with similar profit potential as 3COM.

On April 16, 2010, I invested $3,686.95 in a different type of special situation. This one involves an activist investor that has a track record for making changes to boards and then improving business profitability. This investment relies on shareholders voting in support of the proxy distributed by the activist investor.

On April 22, 2010, I sold out of my shares of net-net Conn’s (CONN) after shares ran up substantially. I sold the last 500 shares of Conn’s (CONN) is the Special Situations Real Money Portfolio. My stop order was triggered and 400 shares were sold for $9.75 and 100 shares sold for $9.82 per share. The total proceeds from that sale came to $4,875.05. I bought this block of 500 shares on February 9, 2010 at $4.50 per share for a total cost of $2,256.95, Therefore, my total profit for this trade was $2,618.10. The return on these 500 shares came out to be an amazing 116%!

Finally, on April 26, 2010, my shares of Boss Holdings (BSHI) were removed from my account and I should be receiving $7.65 per share shortly. I originally bought the 99 shares of Boss Holdings in my account for $6.00 per share on January 22, 2010. Later in the day on April 26, 2010,  I also put in an order to buy another merger arbitrage opportunity with a small regional bank.

If you’d like to learn more about the positions I’ve been trading in this portfolio, follow my research on new special situations, and participate in our exclusive community of stock workout aficionados, consider joining my premium service, Fat Pitch Financials Contributors Corner.

Disclosure: At the time this article was posted, I owned shares of Biglari Holdings (BH) and Boss Holdings (BSHI). I no longer own shares of 3COM, and Conn’s (CONN).

What caused March to be such a good month? Some of the positions that I picked up earlier in the year finally starting coming to maturity. I sold three different positions this past month.

First, let me discuss a stock that was trading below Benjamin Graham’s deep value screen that selects stocks trading below two-thirds of net current asset value (NCAV). On February 8, 2010, I bought 500 shares of Conn’s (CONN) at $5.33 per share for the Special Situations Real Money Portfolio. I estimated Conn’s NCAV to be about $8.39 per share. On March 11, 2010, I sold those 500 shares of Conn’s for $6.85 per share.  My main reason for selling those 500 shares was because Conn’s was selling above 66% of NCAV on no new significant news. My total profit on this trade was $746.05. That’s a 27.9% return in just over a month! I also had bought an additional 500 shares of Conn’s for $4.50 per share on February 9th when the stock price plunged. I’m hoping to sell those remaining shares at or close to NCAV. Given that CONN is trading around $8.03 this morning, that might not be too far away.

I sold the 99 shares of MDS Inc. (MDZ) held by the Special Situations Real Money Portfolio on March 16, 2010. I sold the shares at $8.45 a share. My total proceeds from that sale came to $829.58. Since I bought those shares on February 22, 2010 for a total of $828.65 my return on this trade was $0.93. I basically broke even. Why did I sell? Basically, I didn’t realize the tax withholdings associated with this Canadian tender offer. Given that this is a tax advantaged Coverdell Education Savings Account, I don’t believe I’d be able to recover the tax withholding on my income taxes next year. Also, I’d have to pay a $25 fee to tender the shares. Therefore, I placed a limit order shortly after I figured this out. That limit order was triggered when MDS shares traded above $8.45. Given that MDS is now at $8.86, maybe I should have waited until the impacts of the reduced share count were felt before selling.

On March 24, 2010, I sold the 4,999 shares of Kid Castle Educational Corp. (KDCE) in the Special Situations Real Money Portfolio. I sold the shares for $0.17 per share, just a penny below the tender price of $0.18 that the company was offering. I’d rather have the certainty of cash in hand rather than wait weeks for the last penny, so I sold at $0.17. The total proceeds from this stock sale came to $842.86. I bought these shares on October 21, 2009 for a total of $606.83. My total return for this trade came to 38.90%. The average annualized return given the trade took 155 days is about 91.6%.

So far this year, the Special Situations Real Money Portfolio is up 8.6% year-to-date. Overall, the portfolio is up 180.00% since inception on October 19, 2004. The internal rate of return or average annualized rate of return is still an impressive 31.27%. If you’d like to learn more about the positions I’ve been trading in this portfolio, follow my research on new special situations, and participate in our exclusive community of stock workout aficionados, consider joining my premium service, Fat Pitch Financials Contributors Corner.

The main issue this month was that none of the deals I’m invested in came to completion. It was a rather boring month in general.  There have been very few new opportunities and there hasn’t been much activity on existing deals. This pattern makes me wonder if the economy is at an inflection point or whether it is just stagnating.

I did pick up some shares of a stock trading below two-thirds of net current asset value. Right after I picked up the shares, the price promptly dropped 15% the next day. I kept my wits and doubled my position at the new low. I always find it mentally challenging to double down on a position so quickly, but it often proves to be the wise thing to do.

I also picked up an odd lot tender offer. However, I made an error this time. I learned that if you participate in tender offers for foreign company shares you have to be aware of potential tax withholdings. Foreign taxes can be imposed even in a tax sheltered account, like Coverdell Education Savings Account, which is what the Special Situations Real Money Portfolio is. My plan on this position will be to hold it until it produces a slight gain and then sell it before the tender offer expires. If the share price falls substantially before then, I’ll tender the shares and face the 15% tax withholdings. Live and learn.

Overally, the Special Situations Real Money Portfolio is up 155.81% since inception on October 19, 2004. The internal rate of return or average annualized rate of return is still an impressive 29.07%. If you’d like to learn more about the positions I’ve been trading in this portfolio, follow my research on new special situations, and participate in our exclusive community of stock workout aficionados, consider joining my premium service, Fat Pitch Financials Contributors Corner.

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.

You can follow my latest research and see the latest trades in the Special Situations Real Money Portfolio by subscribing to my premium service, Fat Pitch Financials Contributors Corner. As a member of Contributors Corner, you will also gain access to my extensive archive of special situations and workout opportunities, and you will become a member of the active forum community, which shares new opportunities and discusses the latest developments on the stocks we are following.

Disclosure: I no longer own shares of Sun Microsystems (JAVA) or MAXXAM (MXM).

My overall annualized rate of return since inception is 30.75%. The Special Situations Real Money Portfolio started on October 19, 2004 with just $2,000. Each year since then, I’ve added the maximum Coverdell Education Savings Account annual contribution of $2,000. The total amount I’ve invested in this account is $12,000. Given that the Special Situations Real Money Portfolio ended 2009 with a total value of $30,938.09, my total profit as of December 31, 2009 is $18,938.09. The total return since inception is 157.30%. I hope to maintain this record of performance for the next eleven year until my son starts college.

Stepping back a bit, I’d like to talk a bit about how last month went. As you might recall, the Special Situations Real Money Portfolio in November ended with a balance of $26,972.91. I made a $2,000 deposit last month. The portfolio had a balance of $30,938.09 when the market closed on December 31, 2009.  Adjusting for the deposit, the portfolio gained 6.78% in December. As of December 31, 2009, the Special Situations Real Money Portfolio held the following positions:

If you want to review all the trades of this portfolio and my special situations research, subscribe to Fat Pitch Financials Contributor’s Corner. As a premium member, you will be notified of new trades in the Special Situations Real Money Portfolio, have access in all the research used to find special situations opportunities for this portfolio, and be able to participate in the active forum composed of fellow savvy investors interested in special situation opportunities.

Disclosure: I own shares of MAXXAM (MAXX), 3Com (COMS), Sun Microsystems (JAVA), Kid Castle Educational (KDCE), Sunstone Hotel Investors (SHO), and Western Sizzlin (WEST).

The Special Situations Real Money Portfolio is a real Coverdell Education Savings Account I created for my son on October 19, 2004. I decided to dedicate this small tax sheltered account to special situation opportunities and Graham style stock workouts. Back in 2004, the primary focus was on going private transactions. Since then, I have also added tender offers, spinoffs, split-offs, net-nets, merger arbitrage, and some other unique event based opportunities.

The year-to-date performance for the portfolio remains a strong 45.35% return. Looking back at the portfolio’s performance since inception on October 19, 2004, the Special Situations Real Money Portfolio has produced a total return of 169.72% as of the close of business on November 30, 2009. The average annualized return since inception remains an amazing 29.24%.

The Special Situations Real Money Portfolio was involved in several transactions this past month.  On November 9th, I received 93 shares of Steak ‘n Shake (SNS) from the 200 shares of Western Sizzlin (WEST) the account held then.  I also received $0.13 in cash in lieu of fractional shares as a result of that stock dividend/spinoff.

Also on November 9th, I was cashed out of the 1,000 shares of Centennial Communications Corp. (CYCL). I received $8.50 per share in cash from AT&T (T) as expected in that merger deal.  I originally purchased those shares of Centennial Communications on October 2, 2009 for $7.90 per share. My net return on that 39 day transaction was 7.5%. The average annualized rate of return for that simple deal came to a whopping 70.2%.

Then on November 10th, I picked up another 200 shares of Western Sizzlin (WEST) at $8.68 per share. Western Sizzlin shares now represent the right to receive a callable 5 year debenture with a $8.07 face value that pays 14% interest. Even if the debenture is called after the first year, I should get a nice return on this investment.

I’ve been also looking for another split-off to invest in and I found one on November 16th. Bristol-Myers Squibb (BMY) initiated a split-off of their infant formula subsidiary, Mead Johnson Nutrition (MJN). Bristol-Myer  shareholders will roughly receive $1.11 in Mead shares for each $1 in Bristol shares they tender. I love the odds associated with these type of deals. I picked up 99 shares to avoid any proration when I tender my shares.

Finally, on November 19, 2009 I bought another merger arbitrage position in a tech company. If you are interested to learn more about this recent transaction, consider becoming a member of Fat Pitch Financials Contributors Corner. Sign up for my premium Fat Pitch Financials Contributors Corner to track my research and follow my next moves in the Special Situations Real Money Portfolio.

This little investment experiment worked out much better than I ever dreamed it could. In fact, the results were so good it drew a lot of traffic to the going private transaction table I maintained here on the blog. It seemed that as soon as I posted a deal on the going private transactions table, the profit margins would evaporate.

I also became worried that some of the attention would make it back to the companies that were going private. There is always the danger that they could restructure their offers to the detriment of small individual investors. Therefore, I decided to put the going private transaction list behind a password wall and I created the premium service that I now call Fat Pitch Financials Contributors Corner. In Contributors Corner, I still maintain the going private transaction list and I also now track odd-lot tender offers, cash mergers, spinoffs, net-nets, and manage an active members only forum dedicated to discovering and discussing special situations.

This past month, the Special Situations Portfolio held steady. As I reported last month, the Special Situations Portfolio closed out September with a balance of $26,594.77. When the market closed on October 30, 2009, this account was worth $26,235.05. That’s down 1.4% for the month. Most of that decline can be attributed to one merger arbitrage opportunity that I recently entered, which has subsequently declined in price.

The year-to-date performance for the portfolio remains a strong 41.38% return. Looking back at the portfolio’s performance since inception on October 19, 2004, the Special Situations Real Money Portfolio has produced a total return of 162% as of the close of business on October 30, 2009. The average annualized return since inception remains an amazing 29.0%.

I entered three new positions this month. The names of those stocks are available to members of Fat Pitch Financials Contributors Corner. They include two merger arbitrage plays and one small going private transaction.

I only completed one transaction in October and it involved New Horizons Worldwide (NEWH). Back on April 20, 2009, I bought 24 shares of New Horizons Worldwide at $0.56 per share. My total cost for this tiny transaction was $20.39. This reverse/forward stock split going private transaction was expected to pay out $1.85 per share in cash to shareholders holding less than 25 shares. There was not much profit potential in this transaction, but I thought it would make for a great learning opportunity for new special situation investors. I only picked up these shares when the price dropped significantly down to $0.56. Limit orders are critical on these types of trades given the low liquidity. On October 9th, I was finally cashed out. I received a total of $44.40 for my 24 shares.  That comes out to a 118% return in less than six months. It’s hard to turn down that kind of return, even if the overall payout is only $24.01.

I hope next month I’ll be able to share the results of some larger transactions. Until then, you can track my current trades by becoming a premium member of Fat Pitch Financials Contributors Corner.

Disclosure: I no longer own shares of New Horizons Worldwide (NEWH).

The year-to-date return on the portfolio is now up to 43.3%.  Looking back at the portfolio’s performance since inception on October 19, 2004, the Special Situations Real Money Portfolio has produced a total return of 166% as of the close of business today. The average annualized return since inception is now an amazing 30.2%.

Let’s take a look at some of the transactions that took place this past month. On August 14, 2009, I bought 249 shares of Zareba Systems (ZRBA) for $3.65 per share. Zareba Systems is planning to go private via a reverse stock split followed by a forward stock split. The company plans on cashing out shareholders holding less than 250 shares. Shareholders holding less than 250 shares will be given $5.20 per share in cash when the reverse/forward stock split occurs. On September 10th, the company decided to call off the deal. On the morning of September 14th, I sold the 249 shares of Zareba Systems (ZRBA) for $4.9001 per share. I made a nice net gain of 32.5% on this transaction ($297.37 it total profit). That’s extremely good (and lucky) given that this going private transaction was canceled.

Also on September 14th, I sold all 1,500 shares of Heely’s (HLYS) in the Special Situations Real Money Portfolio at $2.75 per share. Shares of Heely’s were up almost 20% on September 14, 2009 with no real news, so I thought it would be prudent to sell, especially considering $2.75 is close to my original calculation of $2.96 in net current asset value per share. It is likely that Heely’s NCAV has declined since my original estimate and I’m not comfortable holding this company above its liquidation value. I originally bought those 1,500 shares on May 20, 2009 at $1.83 per share. My cost basis is $2,751.95. I received $4,118.05 in proceeds from the sale. That’s $1,366.10 in profit from that investment, which comes out to a 49.6% net gain in less than four months.

At the end of September, I now find myself with a relatively large cash balance of $22,950.61. Market conditions are changing and hopefully the new wave of M&A activity will help me find some new opportunities to deploy my cash. However, I want to avoid taking on too much market risk. I think the economy could go either way at this time, so I’m going to remain cautious.

Sign up for my premium Fat Pitch Financials Contributors Corner to track my research and follow my next moves in the Special Situations Real Money Portfolio.

Disclosure: I no longer own shares of Zareba Systems (ZRBA) or Heely’s (HLYS) at the time of publication.

At the end of August, the portfolio was up 8.6% since the end of June.  Better yet, the Special Situations Real Money Portfolio was up 38.0% year-to-date on August 31, 2009. That crushes the S&P 500 year-to-date total return of 14.97% over the same period.

Looking back at the portfolio’s performance since inception on October 19, 2004, the Special Situations Real Money Portfolio has produced a total return of 156% as of August 31, 2009.  The average annualized return since inception is now an amazing 29.62%. Given the devastating market collapse of 2008-2009, I can now confidently say that the Special Situations Real Money Portfolio has been the most successful financial experiment of my life. This experience has altered my outlook on investing.

Let’s take a look at some of the transactions that took place this past summer. First, I bought 99 shares of Greenville Federal Financial Corp. (GVFF) at $4.90 per share on July 9, 2009. The company plans on going private through a tender offer. On July 16, I turned around and sold those 99 shares for $6.45 per share. I made a quick $139.53, a 28.3% return on that eight day investment.

Next I picked up 499 shares of Collectors Universe (CLCT) by accident on July 13, 2009 for $4.52 per share. This purchase occurred after the tender offer expired, and shares of CLCT have traded down to $4.10 right after I bought the shares. I forgot to lift a limit order I had placed several weeks earlier to purchase Collectors Universe. It was a careless mistake. On July 28, 2009, I sold 100 shares of Collectors Universe (CLCT) for $4.25 per share and then on July 31st I also sold the remaining 399 shares for $4.25 per share. All told, this little mistake cost the Special Situations Real Money portfolio $155.65. The return on that botched move was -6.9%.

On July 20th, I sold 2,000 shares of En Pointe Technologies (ENPT) for $2.38 per share. After that trade, I still had 3,000 shares of ENPT in the portfolio.  On August 11, 2009, I received $7,500 for the remaining 3,000 shares of En Pointe Technologies (ENPT). I got the expected $2.50 per share cash out for the En Pointe Technologies. I originally bought these 3,000 shares of En Point Technologies on March 31, 2009 for $2.06 per share. My total profit from this transaction came out to $1,320. That’s a nice 21.4% return for this straight forward going private transaction merger.

I few new developments occurred earlier this month. I’ll update you on those transactions in early October. If you want to know what those transactions were and want to see my current holdings, I recommend that you subscribe to Fat Pitch Financials Contributors Corner. A subscription to Contributors Corner will also gain you access to my current special situations research, the archives of all the past deals covered, and the intelligent community discussion among current members.

Disclosure: I no longer own shares of Greenville Federal Financial Corp. (GVFF), Collectors Universe (CLCT), or En Pointe Technologies (ENPT) at the time of publication.

The year-to-date return for the Special Situations Real Money Portfolio was 27.07% on June 30, 2009. The S&P 500 has returned less than 3.16% so far this year. I’m trouncing the market with my unique portfolio of special situations.

Looking back at the overall performance of this portfolio since inception, the total return is a whopping 135.79% since I started this Coverdell Educational Savings Account for my son on October 19, 2004. The annualized growth rate has now climbed to 28.29%. I believe that is the highest annualized growth rate I’ve ever reported and exceeds my outrageous goal of maintaining a 25% rate of return.

A couple of key events in June pushed the portfolio to new heights. You might recount XTENT (XTNT) was sold on June 4th. My $1,503.86 investment in this net-net on May 27, 2009 produced a profit of $1,489.11. That 99.0% total return was amazing, but I was left regretting I didn’t invest more in XTENT and I still wish I held out for the much higher prices that stock fetched shortly after I sold.

In addition to investing in a net-net, I also completed two tender offers for closed-end funds. In May, Neuberger Berman announced that it would be conducting a tender offer for its family of closed-end funds. Neuberger Berman was offering to pay 98% of NAV, and best of all, odd lot positions would not be subject to proration if the tender offer was oversubscribed. I bought 99 shares of Neuberger Berman Intermediate Municipal Fund (NBH) on May 6, 2009 at $12.51 per share for a total cost of $1,245.44. I also bought 99 shares of Neuberger Berman Dividend Advantage Fund (NDD) on May 14, 2009 at $6.71 per share for a total cost of $671.24.

On June 9, 2009, I received $13.46 per share in cash for the 99 shares of Neuberger Berman Intermediate Municipal Fund that I tendered. When those shares were cashed out, I received $1,332.54. However, I also got charged a $25 fee, but then on June 15, 2009 I also received a dividend of $5.37. The bottom line is that I netted $67.47, a 5.4% total return. If I assume that I received all the cash on June 15th, my average annualized rate of return for this closed-end fund odd lot tender offer came out to 48%.

On June 9, 2009, I received $7.76 per share in cash for the 99 shares of Neuberger Berman Dividend Advantage Fund (NDD) that I tendered. When those shares were cashed out, I received $768.24. However, I also got charged a $25 fee, but then on June 15, 2009 I also received a dividend of $6.44. The bottom line is that I netted $78.44, an 11.7% total return. If I assume that I received all the cash on June 15th, my average annualized rate of return for this closed-end fund odd lot tender offer came out to 129%.

While these two tender offers didn’t boost the overall balance of the Special Situations Real Money Port by much, they were still profitable and good practice for future tender offers that could potentially generate much larger returns. To keep up with the latest moves of this portfolio, consider subscribing to my premium service, Fat Pitch Financials Contributors Corner. Contributors Corner also has the complete transaction history of the Special Situations Real Money Portfolio. There you will also find my weekly list of stocks trading below two-thirds of net asset value, a list of current odd-lot tender offer opportunities, and much more.

Disclosure: I do not currently own shares of Neuberger Berman Intermediate Municipal Fund (NBH), Neuberger Berman Dividend Advantage Fund (NDD), or XTENT (XTNT).

XTENT is a development stage medical device company focused on developing and commercializing customizable drug eluting stent systems for the treatment of coronary artery diseases. Based on the March 31, 2009 balance sheet, XTENT’s net current asset value is $0.46 per share and its book value is $0.53 per share. Net cash per share is about $0.40 per share. Insiders own over 60% of shares.

Management indicated on March 15, 2009 in a preliminary proxy that they estimate the amount ultimately distributed during the proposed business liquidation will be between approximately $0.11 and $0.40 per share, assuming the company is unable to sell its intellectual property. At the time, I thought there was a decent probability that the company would be able to sell some of its intellectual property, and thus boost the ultimate payout. I also thought there was the potential that someone would want to buy this company as a corporate shell.

I picked up the 5,000 shares of XTENT (XTNT) on May 27th at just under $0.30 per share for the Special Situations Real Money Portfolio. I shared news of my purchase with members of my premium Fat Pitch Financials Contributors Corner service. My total cost for these shares came to $1,503.86. I decided to buy these shares because XTENT was trading at less than 2/3 NCAV and the company also recently announced that it would be liquidating.

The 5,000 shares of XTENT (XTNT) were short lived in the Special Situations Real Money Portfolio. I made the mistake of keeping a limit order open to sell the shares at $0.38. I placed that limit order on June 3rd, since it appeared the shares might hit that price on no news the day before. I was also getting nervous about off balance sheet liabilities that I hadn’t originally accounted for and was more than happy to sell my shares if the stock approached $0.40 without news. Well, I guess there was news that was forthcoming.

News happened and I wasn’t quick enough to react. On June 4th, my shares were sold at the open for $0.60 per share. News broke that morning that the company received conditional approval from the FDA for an Investigational Device Exemption authorizing it to begin its pivotal clinical program for its Custom NX® drug eluting stent system. The market liked this news and sent shares of XTENT soaring.

When I sold the shares on June 4, 2009, I received $2,992.97 net of costs. My total profit came in at $1,489.11 for this investment. That comes out to a total return of 99.0%. The average annualized return was 4,016% for this 9 day investment.

I should have been thrilled by this performance. However, I suffered some sellers remorse. Shares of XTENT continued to climb until they hit a high of $2.69 on June 5, 2009. The momentum traders really hit this stock hard. However, since there has been no new news, shares have traded down significantly and closed today at $1.31, which around what I safely estimate the shares to be worth if the company is liquidated and the intellectual property is sold off. I think the lesson I learned here is not to underestimate the potential for momentum investors to drive up the price of a penny stock net-net.

I’ve recently been producing a weekly table of stocks trading below two-thirds of net current asset value and sharing it on Fat Pitch Financials Contributor’s Corner. Consider subscribing to this very affordable service to participate in our discussions of these great opportunities, and also gain access to going private transactions, odd lot tender offers, mergers, other special situations, and the current trades of the Special Situations Real Money Portfolio in the premium portion of my site.

The year-to-date return for the Special Situations Real Money Portfolio is 18.25%. The S&P 500 has returned less than 3% so far this year. I’m trouncing the market with my unique portfolio of special situations.

Looking back at the overall performance of this portfolio since inception, the total return is a whopping 119.44% since I started this Coverdell Educational Savings Account for my son on October 19, 2004. The annualized growth rate has now climbed to 26.43%. I believe that is the highest annualized growth rate I’ve ever reported and exceeds my outrageous goal of maintaining a 25% rate of return.

Let’s take a look at some of the completed transactions in May that helped me acheive this amazing performance. I started off the month investing in two of the Neuberger Berman closed end funds. A tender offer was announced for this family of closed end funds. The goal of the tender offer was to reduce the discount to net asset value for these funds by offering to buy up to 10% of outstanding shares at 98% of net asset value. Best of all, odd lot holders (holding less than 100 shares) would not be subject to proration. I placed several low ball limit orders in for these Neuberger Berman funds and I ended up getting 99 shares of Neuberger Berman Intermediate Municipal Fund (NBH) for $12.51 on May 6th and 99 shares of Neuberger Berman Dividend Advantage Fund (NDD) for $6.71 per share on May 14th. The tender offer expired on May 29th and I should be getting cash for each of these positions shortly. I’ll report on how profitable these trades turned out when I get the final numbers.

On May 22nd I sold all 1,600 shares of Wilshire Enterprises (WOC) in the Special Situations Real Money Portfolio for $1.70 per share. I originally bought these shares on April 3, 2009 for $1.51 per share. I decided to buy shares of Wilshire Enterprises after the company agreed to conduct a future tender offer for at least 4 million shares at $2.00 per share as part of an agreement with activist investors Full Value Partners LP and Bulldog Investors. There are only 7.93 million shares outstanding, so proration shouldn’t be too bad. I decided ahead of time to sell the shares if the price ran up, especially since it was recently revealed that the tender offer is not planned to happen until late this summer. I sold when the stock jumped up, but I plan to watch this stock and potentially reenter this position if the price drops below my original entry point. I’m guessing it will.

For this first investment in Wilshire Enterprises, I made a net gain of just over $290. My total return was 12%. Given this investment took just 50 days, the average annualized rate of return comes to an amazing 87%.

Not all my investments turned out so perfectly in May. I had to sell out of my small position in Xedar Corp. (XDRC). I originally purchased 100 shares of Xedar on April 16, 2009 for $0.16 and a total cost of $22.95. Xedar was planning to go private via a reverse stock split where all shareholders holding less than 101 shares would be cashed out for $1.00 per share. However, on May 11, 2009, Xedar announced that it was able to reduce the number of shareholders of record below 300 without the reverse split and was therefore canceling the reverse split. I think this is the first time I’ve seen this happen. I was a bit worried I wouldn’t be able to sell my shares. Luckily the stock price drifted back up, and on May 20th, I sold these 100 shares for $0.30 share and received $23.04 after fees. I was glad I got shares of WOC at a low price, because commission costs made it difficult to exit this position without ending up with a loss.

Finally, I added two stocks selling at below two-thirds of net current asset value towards the end of May. We’ve been tracking stocks that are selling below two-thirds of net current asset value on Fat Pitch Financials Contributors Corner since last fall. Several Contributors Corner subscribers have made substantial returns on some of these stocks. Last month I booked a nice profit on Movado Group (MOV). This month I added 1,500 shares of Heelys (HLYS) at $1.83 per share and 5,000 shares of XTENT (XTNT) at $0.30 per share. Heelys recently had two board members resign in protest. One of the board members was the company founder and the other was his first cousin. XTENT has announced that it is planning to liquidate the company. It should be interesting to see how these net-nets play out.

You can follow the action and discussion of these stocks by subscribing to Fat Pitch Financials Contributors Corner. By becoming a subscriber, you’ll also get access to the complete portfolio history of the Special Situations Real Money Portfolio, announcement of new transactions, current special situation opportunities, community discussions, and full access of the archives that go all the way back to 2004. The discussions in those archives are jam packed with experiences and lessons learned that are invaluable, especially if you are new to investing in going private transactions, tender offers, split-offs, net-nets, and other odd ball opportunities.

Disclosure: I own shares of Neuberger Berman Intermediate Municipal Fund (NBH), Neuberger Berman Dividend Advantage Fund (NDD), XTENT (XTNT), and Heelys (HLYS). I no longer own shares of Wilshire Enterprises (WOC), Movado Group (MOV), and Xedar Corp. (XDRC).

For those of you unfamiliar with this portfolio, the Special Situations Real Money Portfolio is a Coverdell Educational Savings Account that I started for my son on October 19, 2004. I decided to focus this portfolio on special situations, or what Benjamin Graham called workouts. The majority of the earlier investments were in going private transactions, but as I have discovered new opportunities, I have branched out into tender offers, split-offs, mergers, net-nets, and other unique opportunities that I have researched or that have been shared by the Fat Pitch Financials Contributors Corner community.

So far this year, the Special Situations Real Money Portfolio has outperformed the indexes with a year-to-date return of 15.75%. The S&P 500 total return year-to-date has only been -2.5%.

Looking back at the overall performance of this portfolio since inception, the total return is a whopping 114.79%. The annualized growth rate has now climbed to 26.37%. I believe that is the highest annualized growth rate I’ve ever reported and exceeds my outrageous goal of maintaining a 25% rate of return.

Let’s take a look at some of the completed transactions in April that helped me acheive this amazing performance. First, I started off by opening an order for FortuNet (FNET) on April 6, 2009 at $2.74 per share. FortuNet first appeared in Contributors Corner in March as a stock trading below 2/3 net current asset value. Then on March 24th, a member of Contributors Corner notice that FortuNet was proposing to issue a $2.50 per share special dividend. Shares were only trading at $2.78 at the time, so the market was only valuing the company’s assets and business at $0.28 per share! I couldn’t believe it, so I looked over the business again and decided that this was a fat pitch worth swinging at.

It took me until April 9th to accumulate 549 shares of FortuNet. In retrospect, I probably should have raised my limit order a bit, since I really wanted to acquire 2,000 shares. There is always a fine line between maintaining pricing discipline and missing an opportunity.

Eventually, the market finally figured out this bargain. After the special dividend was approved by shareholders and a clarification was posted on April 19th regarding the record date of the dividend being April 27th, the price of FNET shares finally caught up with reality. On April 21, 2009, I decided to sell my 549 shares at $3.85 per share. At that price, FortuNet was selling significantly above its net current asset value and I was concerned that this gaming machine manufacturer faces significant headwinds in their industry given the current economic climate and decline in revenues in the casino sector. My total profit for this trade came to $588.48, a gain of 38.8% on my investment. The average annualize rate of return given it only took 16 days comes out to be a staggering 884%.

The next day, I decided to sell another position, Movado Group (MOV). Last month, I wrote about how Movado Group stock was trading below Graham’s 2/3 of net current asset value criteria. I bought 200 shares at $7.61 per share on March 23, 2009 and then I added another 200 shares at $7.15 on April 13th after the disappointing new quarterly report was released. I calculated the net current asset value of Movado Group to be $11.10 per share using the Jan 31, 2009 balance sheet. Therefore, two-thirds of the NCAV is $7.33, so I decided to buy more when the price of Movado shares dropped below that threshold. I’m sure Movado Group will continue to struggle with sales this quarter, so when Movado shares jumped up to $8.61 on April 22, 2009, I sold all 400 shares. My total profit for this trade came to $471.06, a 15.9% gain on my investment. Considering this investment all occurred within 31 days, the average annualize rate of return for this play came to 187%.

Finally, I received cash for a tiny little going private transaction reverse split for Grill Concepts (GLLC). As I mentioned last month, Grill Concepts was going private through a reverse stock split, where every 35 shares would become 1 share in the future. Those holding less than 35 shares will be getting $1.50 per share in cash. I bought 34 shares of Grill Concepts on February 24, 2009 for $0.35 per share and finally on April 22nd I received the cash for this deal. My total profit for this trade was $32.15 after expenses, but the net gain was 170.6%! Even though the total profit potential for this trade was tiny, I think it was perfect trade for someone who was just getting started in special situations and wanted to learn how these going private transactions work.

I must admit that it is getting harder and harder to find good special situation opportunities in this market. I currently hold $9,249.31 in cash, which is 43% of the portfolio. I will be working hard to uncover some new opportunities to put this cash to work. You can follow my efforts by subscribing to Fat Pitch Financials Contributors Corner. There you will also be able to see the complete history of the Special Situations Real Money Portfolio along with its current holdings.

Disclosure: I no longer hold shares in FortuNet (FNET), Movado Group (MOV), or Grill Concepts (GLLC).

On March 31, 2009, the Special Situations Real Money Portfolio had a closing balance of $18,800. This was up 4.5% from the February closing balance of $17,984.99. However, the S&P 500 was up an amazing 8.76% last month. While investing in special situations can reduce your risks and protect you from general market declines, it can be pretty difficult to keep up with a bull market using special situations, especially when opportunities are scarce.

Over the longer term picture, the Special Situations Real Money Portfolio continues to shine. Year-to-date, the portfolio was up 1.31% at the close on March 31st, while the S&P 500 was still down over 11%. Since inception on October 19, 2004, this little portfolio has cranked out 88% gains on our investment. The annualized rate of return climbed up to 22.11% at the end of March. These long term performance numbers trounce the general market returns over the same period by almost any metric you can think of including most professional hedge funds. I am increadibly proud of the way this portfolio has turned out. You too can create a similar portfolio by taking advantage of my research at Fat Pitch Financials Contributors Corner. Even though my performance numbers were amazing, I suspect several members of Contributors Corner are even performing better than I am.

Before I end, I would like to share with you my moves in this portfolio over the past month. The first and most disappointing decision I made this past month was to sell the 44 shares of Rohm & Haas (ROH) I held. As the Dow Chemical (DOW) buyout of Rohm & Haas appeared to be falling apart at the end of February, I convinced myself that this poor deal was unlikely to be completed at the original price of $78 per share. As news broke that Dow and Rohm & Haas were in some sort of settlement talks, I decided to bail out $63.97 on March 6th. I had originally bought ROH shares at $67.19 on December 19, 2008. Factoring in the one dividend I received, my total loss came out to $137.56, a 4% loss. While that loss is not terrible, it is killing me that the Rohm & Haas deal closed yesterday against all the odds for just below $79.

On March 23rd, I picked up a small position in the Movado Group (MOV). The shares of this luxury watch maker were selling below 66% of net current asset value (NCAV). I’ve been tracking stocks selling below 2/3 of NCAV on Contributors Corner over the past few months and I finally decided to include one in the Special Situations Real Money Portfolio. It will be interesting to see how this works out.

Towards the end of March I also had 34 shares of Grill Concepts get removed from my account. Grill Concepts is going private through a reverse stock split, where every 35 shares will become 1 share in the future. Those holding less than 35 shares will be getting $1.50 per share in cash. Since I bought 34 shares of Grill Concepts on February 24, 2009 for $0.35 per share, my final annualized return will be very high for this deal when I get the cash for these shares. That will probably happen sometime this month.

Finally, I picked up another going private transaction stock at the end of the month. This one is slightly different than Grill Concepts, since it will be done as a merger. All shareholders will be cashed out when the merger is completed. For now, I’m keeping this stock private for my premium members at Contributors Corner and for my Twitter followers.

Disclosure: I own shares of Movado Group (MOV) and Grill Concepts at the time this post was published. I do not own shares of Rohm & Haas or Dow Chemical at this time.

The month of February started off great with the completion of the Meadow Valley buyout (MVCO). That play brought me a 16.9% gain on my original investment. Given that I only held the shares for 66 days, my average annualized return came out to 93%. I didn’t expect this deal to work out so well, especially given that the buyer was trying to squeeze down the price.

The next special situation that came to completion in February was Puget Energy (PSD). I ended up selling my shares for $29.95 per share on February 6, 2009. The total proceeds for the 78 shares I held was $2,329.13. Then I received an additional dividend of $19.50 on February 17th. My total return for this trade was $617.88, a 35.7% total return on my initial investment. My average annualized rate of return for this special situation was 110% including the time it took to receive the dividend.

On February 6th, I also received cash for the 100 shares of NDS Group (NNDS) I had picked up in January. I only had these shares for 25 days. The total return for this trade was 6.1%. If you factor in the 25 days, the average annualize rate of return for this trade came out to a nice 89%.

All this new cash started to burn a hole in my pocket, so I went shopping for new special situations. Late in the day on February 6, 2009, I bought 965 Emageon (EMAG) shares at $2.59 per share. This is in addition to the 250 shares I already purchase on January 30, 2009 for $2.44 per share. That turned out to an unfortunate special situation to get involved with. For all intents and purposes, this looked like a fairly low risk merger that was in the final stages. However, the financing for the deal was being done Stanford International Bank. Just before the market closed on February 10th, a member of Contributors Corner warned us of a blog article detailing concerns about Stanford International Bank. I dismissed the article since is was only posted hours before the Emageon deal was suppose to close, so it seemed like disinformation to create doubt and uncertainty before this deal was going to close. I also couldn’t verify any of the information provided in the article in a timely fashion. It turns out I was wrong and Stanford imploded when the financing for Emageon never arrived. I immediately bailed out of this stock on February 11th at the market open for $1.65. However, only 1,000 of the 1,215 share I held sold at that price. I tried to sell the remaining 215 shares at a reasonable price, but the shares of EMAG dropped all the way down below a buck even though the net current asset value was higher. Eventually when word of a new buyer came out, I sold the remaining 215 shares for $1.73 per share on February 24th. I lost 35.% in all on this investment. At first I thought I might have made an error on this special situation, but after looking back on it, I realize that there was little I could do to research Stanford given the value of my investment. I factored in the probability that something bad might derail this merger and the returns still looked good. I think as special situation investors we just need to realize that we have to take some losses on random events on occassion and not let ourselves become so cautious that we miss out on all the great opportunities. The best way to mitigate this risk is to make sure we never invest too large a portion of our portfolio in any given opportunity.

Finally, I got involved in one more deal in February. I picked up 400 shares of American Land Lease (ANL) on February 6th (a very busy day) for an average price of $13.55 per share. At first I bought 200 shares for American Land Lease at $13.62 thinking I had a bargain. Then I added another 200 shares at $13.48 when the market decided to drop the share price down lower. I usually don’t get involved in third-party tender offers, but when Green Courte Partners extended their tender offer for American Land Lease until February 17th in order to get any remaining stragglers (93% had already tendered), I couldn’t resist their $14.20 per share offer. It seemed like a great fat pitch to me. Thankfully, it was! I received $14.20 per share on February 23rd. My gross return for this deal was 4.4% after commissions and fees. Given it only took 18 days, this little tender offer produced an average annualized return of 90%! I needed that after the Emageon debacle.

The bottom line is that this past February was one of the busiest ever for the Special Situations Real Money Portfolio, but all that activity really didn’t generate a positive net return. I was still down 3 percent for the year. However, I’m still very happy with the long term performance. The portfolio on February 27, 2009 had a total return of 79.85% since inception. The internal rate of return for my Special Situation Real Money Portfolio is 21.06%. If you are interested in tracking my latest research and stock purchases, consider subscribing to Fat Pitch Financials Contributors Corner, my premium research service and investor community.

Disclosure: At the time this article was posted, I no longer held shares of PSD, MVCO, NNDS, EMAG, and ANL.

The third special situation opportunity that came to completion last week was NDS Group PLC (NNDS). This was probably a much simpler and less stressful play than Puget Energy and Meadow Valley. Let me provide you with some of the background.

NDS Group PLC announced back in September of 2008 that it was going to be taken private by News Corporation (NWSA) and two newly incorporated subsidiaries of funds advised by Permira Advisers LLP. Financing looked slightly complicated, but with News Corp backing, I wasn’t too concerned.

NNDS shareholders voted on January 13, 2009 to take NDS Group private by cashing out the ADR holders for $63 per share. On that same day, I decided to add 100 shares to the Special Situations Real Money Portfolio. I picked up the shares for $59.26 per share. The total cost came to $5,932.95, which I consider a maximum position size at this moment. As expected, shareholders approved the deal later that day.

Less than a month later (25 days to be exact), NDS Group stopped trading on February 4, 2009. I was cashed out at $63.00 per share, but it looks like $0.05 a share was withheld as an ADR fee. It is still unclear if I’ll be paid back for the five cent fee by the buyers. Nevertheless, I received $6,295 for the 100 shares on February 6, 2009. I appreciated being cashed out so promptly. The total return for this trade was 6.1%. If you factor in the 25 days, the average annualize rate of return for this trade came out to a nice 89%.

Looking back at all of the action in the Special Situations Real Money Portfolio last week, Puget Sound returned 34.6%, Meadow Valley returned 16.9%, and NDS Group returned 6.1%. The average annualized returns were 117%, 93%, and 89% for Puget Sound (PSD), Meadow Valley (MVCO), and NDS Group respectively. The total amount of profit for these three trades came out to $1,773.48. I’ve already put some of this capital back to work, which you can read about by subscribing to Fat Pitch Financials Contributors Corner. I might find out the results of that new investment tomorrow, so I might be able to add a fourth to this list real soon.

Now you know why I wasn’t worry about the weak performance of the Special Situations Port back in January. As I predicted in the January 2009 Special Situations Real Money Portfolio update, things have turned around nicely in February. As of the close of the market today, the Special Situations Real Money Portfolio is up 5.34% this year, trouncing the -8.4% return for the S&P 500. The more amazing number is the 24.67% internal rate of return since inception back in 2004. You can track the latest performance number for the Special Situations Real Money Portfolio by viewing the continually updated box in the lower part of the right sidebar on the Fat Pitch Financials.

Disclosure: I did not own shares of MVCO, PSD, NNDS, or NWSA at the time this article was posted.

The special situation with Meadow Valley involved the buyout of the company by the private equity firm, Insight Equity.  Back in July of 2008, Insight Equity offered to acquire Meadow Valley for $11.25 per share in cash. The original plan was to have this deal close by December 31, 2008.

Things started to get complicated after the steep market selloffs in November. My guess was that Insight Equity started getting cold feet given the current economic climate. Meadow Valley received a letter on December 1, 2008 from Insight Equity alleging that it believed that Meadow Valley may have suffered a “Material Adverse Effect” and that this violated one of the conditions of the merger agreement. Insight Equity believed the material adverse effect “may have” been a result of an alleged decrease in the fair market value of Meadow Valley in excess of $6.0 million since the date of the Merger Agreement. Given all the talk about major government stimulus spending on construction and the solid financial results Meadow Valley just posted, this arguement seemed weak at best. Insight Equity just wanted to push Meadow Valley to reduce their price, or at the minimum, stall the deal.

As luck would have it, I had just decided to buy shares of Meadow Valley in the morning of December 1, 2008 just before the above news broke. I added 500 shares of MVCO at $9.61 for a total cost of $4,811.95. My trade was triggered automatically by my limit order right as the news broke about Insight Equity. If I remember correctly, I think MVCO traded down into the $7 region. I was kicking myself all evening over this trade.

After I settled down a bit, I started to think though what was happening. I came to the conclusion that Insight Equity was being opportunistic and was hoping to push down the buyout price to probably $10 even or they were potentially stalling in order to deal with cash flow problems from the economic turmoil in the financial markets. Regardless, I’m sure they realized that Meadow Valley would also be a potential great play on any major stimulus package.

Meadow Valley pushed ahead with plans as if nothing had changed. By the end of December, they held a shareholder meeting where stockholders approved the $11.25 merger agreement. Then in January when the original merger deadlines where passed, shares of MVCO plunged into the $6 territory. I was a bit worried, but I had decided to load up on Meadow Valley if the deal was called off. It was looking like a good long term value play on the economic stimulus package. By mid-December most market participants had written off any chance of a merger still happening with Insight Equity. However, a member of Fat Pitch Financials Contributors Corner had a long conversation with the Meadow Valley CFO that lead him to believe there was still a good chance that this deal might happen and that the company was in healthy shape.

On February 2, 2009, we received the surprising news that the Meadow Valley merger closed under the original terms. All of us were surprised, and none of us expected it so suddenly without any prior news. In fact, MVCO lasted traded that day at $6.41 and then only jumped up to $11.25 in after hours trading.

On February 4, 2009, I received $5,625 for the 500 shares held in the Special Situations Real Money Portfolio. That was a 16.9% gain on my original (rather expensively acquired) investment. I held the shares for 66 days. Therefore, my average annualized return came out to 93% (16.9 * 365/66) for this emotionally challenging special situation. I’m sure some of the other members of Contributors Corner who bought in January made even more impressive returns on this opportunity.

I have incentivized the members of Contributors Corner by providing three day membership extensions for being the first to share valuable news or research on new or existing special situations that we are tracking. This leverages the years of collective experience we have with these unusual market anomalies. So by joining Fat Pitch Financials Contributors Corner, you not only get my research, but you also get breaking news and analysis provided by our collective efforts at a very affordable price.

I bought 78 shares of Puget Energy (PSD) for $22.10 per share for a total cost of $1,730.75 back in October. At that time, the only real condition that remained for this buyout was the approval of the Washington Utilities and Transportation Commission. I estimated that this buyout could close in less than 4 weeks. The final reply brief was due to Washington Utilities and Transportation Commission on October 23rd. Nothing since that date indicated any issues. “All federal regulatory and shareholder approvals required for the merger have been obtained. Puget Holdings has committed equity and debt financing in place to complete the merger and to provide significant capital for PSE’s future needs,” noted a press release at the time. This merger arbitrage looked relatively low risk given the potential rewards at that point.

As is often the case with mergers and acquisitions of utilities, things always seem to take longer than anticipated, probably because of the regulatory approvals required by government agencies and the politics involved. The Washington state attorney general’s office opposed the sale of Puget Sound Energy to the group of investors from Canada and Australia. The Public Counsel continued to oppose this deal thoughout the process and was able to delay the decision by filing “new” information to the Washington Utilities and Transportation Commission even after the closing date for comments.

There was also a grassroots movement to block this deal by including referendum on several county election ballots in Washington pushing for the formation of Public Utility Districts (PUDs). These efforts failed to pass in all the counties in November, except the most rural, Jefferson County.

After the elections, I assumed that the acquisition would be approved in short order. However, the Commission meeting before Thanksgiving failed to take up the issue and the deal looked like it could be in trouble, especially given the credit crisis was taking a turn for the worse at that point. Questions about the financing of this deal were starting to worry many.

A member of Contributor’s Corner then noted:

On Dec 12, PSD announced the merger will not be completed this year, but from what I gather, it was only pushed back to mid/late January. Meanwhile, the share price is under $23. The recent drop in the dollar would seem to make this even more of a no brainer. Potential to make 30% in a month, so I am considering adding to my position. What am I missing here?

I too could find no reason for the recent PSD decline at that time. I thought maybe it was just another hedge fund liquidating assets in order to deleverage. I recently discovered that Madoff held shares of PSD, so it is no surprise that PSD shares were being sold as part of the liquidation of those funds. I’m sure other hedge funds hurting for cash were also doing the same.

Finally, on the last day of 2008, Washington State regulators finally approved the acquisition of Puget Energy (PSD). My guess is that this New Year’s Eve announcement was timed to get the least amount of attention from local opponents to this deal. Surprisingly, shares of PSD once again dipped on the lack of news regarding the closing date. There seemed to be an information blackout regarding the closing of the deal and the only news was the announcement on January 6, 2009 that Puget Energy declared a dividend of 25 cents per share of holders on January 21, 2009. Therefore, I assumed correctly that the deal would not close until after January 21st.

Finally, on January 16th, Puget Energy announced that this acquisition would close on February 6th for $30 per share and that a dividend of 0.00278 per share per day for each day after and including January 22nd would be paid. If the deal closed on February 6, as it did, then this dividend would be 0.04448 per share.

I needed cash on Friday for another opportunity, so I ended up selling my shares for $29.95 per share on February 6, 2009. The total proceeds for the 78 shares I held was $2,329.13. My total return for this trade was $598.38 (excluded an upcoming dividend payment of $19.50 on February 15), a 34.6% total return on my initial investment. Since I held this investment for 108 days, my average annualized rate of return for this special situation was 117%.

This was only one of the three fat pitch opportunities realized by the Special Situations Real Money Portfolio last week. I’ll write about the other two shortly, or if you are impatient, you can subscribe to Fat Pitch Financials Contributors Corner to see the full portfolio history of the Special Situations Real Money Portfolio along with my latest trades and research notes.

I have several great special situations that are still working themselves out. In fact, just yesterday Meadow Valley Corp. (MVCO) announced the completion of its going private transaction. Shares of MVCO jumped 74.73% after hours on the news. I have 500 shares of the stock in the Special Situations Real Money Portfolio, so I expect this portfolio’s performance for the year to jump into positive territory when I am cashed out of this position.

I also have two other opportunities that will be closing soon. These include Puget Energy Holdings (PSD), NDS Group PLC (NNDS), and a small position in Emageon Inc. (EMAG). The only weak play I currently hold is Rohm & Haas (ROH).

Going back the Special Situations Real Money Portfolio performance numbers, since inception back in 2004 my overall return is 70.85%. Adjusting for new funds and the timing of returns, the IRR for this portfolio is a very respectable 19.65% at the close of business on January 30, 2009.

I am currently fully invested (only $24.08 in cash) and am waiting to be cashed out of a few positions in the next few weeks before adding news stocks. If you are interested in tracking my latest research and stock purchases, consider subscribing to Fat Pitch Financials Contributors Corner, my premium research service and investor community.

Disclosure: I own shares of PSD, MVCO, NNDS, EMAG, and ROH at the time of making this post.