Browsing Category: "Special Situations Real Money Portfolio"
October was a rather boring month for the Special Situations Real Money Portfolio. After the liquidity crunch in August from the blowup in the sub-prime mortgage market, tender offers have largely disappeared and going private transactions are scarce.
The Special Situations Real Money Port was slightly down in October. This account closed October with a balance of $12,993.11. In September, the portfolio ended the month with $13,136.48, so I’m actually down $143.37 in October. You can track the current balance of the Special Situations Real Money Portfolio in real time by looking at the left sidebar on Fat Pitch Financials.
Regardless of the slight decline in balance in October, as of October 31, 2007, I’m up 36.34% since the beginning of this year. Since inception, I’ve earned a 25.4% internal rate of return (IRR). I’m very happy with that long term performance, and hope to maintain it.
In terms of transactions in October, there are only a few things to report. I tried to get in on the Western Sizzlin Corp. (WSZL) rights offering this month, but
I bought the stock too late and missed out on receiving rights. I also bought a tiny reverse split that you can find out about if you subscribe to Fat Pitch Financials Contributor’s Corner. I’m also still holding Sallie Beauty Holdings (SBH). That stock is still treading water.
The majority of the Special Situations Real Money Port is in cash, $7,198.24 to be exact. It was a boring month for deals. Hopefully, there will be better opportunities to deploy cash in the near future.
I just realize I never got around to reporting on the performance of the Special Situations Real Money Portfolio in August. I must have been having too much fun at the beach. September has been all work, so there is no excuse this month.
The Special Situations Real Money Port has performed extremely well recently. The portfolio ended the day today with a value of $13,136.48. At the end of July, the Special Situations Real Money Port only had a balance of $12,044.13. In just over 2 months, I’m up 9%.
The year-to-date return is a whopping 37.85% and the overall absolute return since inception is 64.21%. Most importantly, the Special Situations Real Money Port has an annualized internal rate of return (IRR) of 27.12%. You don’t get that kind of performance with index funds. The best part of my experiment with this portfolio is that I’ve been able to keep risk fairly low by focusing on going private transactions, odd lot tender offers, spinoffs, and split-offs.
The portfolio currently only holds Sally Beauty Holdings (SBH) and cash. Cash makes up $10,472.48 right now. There aren’t many good deals right now. The subprime blowup has dried up financing for new deals, especially buybacks done through tender offers. I have my eye on a couple of going private transactions, but I’m in no rush to commit to them yet.
So how did I do so well these past few months? In August, I sold my position in BNS Holdings (BNSIA) for a loss. I then used to proceeds to buy 99 shares of Home Depot for $37.05 per share to take advantage of a tender offer. Sadly, I was only cashed out for $37.00 but I did get a small dividend to offset my small loss.
My profits came from my success with a tender offer for Expedia (EXPE). I made $289.06 on that little tender offer that I started at the end of July and was cashed out on August 17th.
I then went and bought 96 shares of Liberty Global (LBTYK) for $37.34 on August 21, 2007. I was cashed out for $40.00 per share on September 18th. That deal netted me $248.41.
At the end of August, I was also cashed out of my position in Farmers Capital Bank (FFKT) which netted me $72.96. I then went on to buy 99 shares of Integral Systems (ISYS) for $24.51 and I was cashed out for $27.00 per share on September 18th.
To get the full history of the Special Situations Real Money Portfolio join Fat Pitch Financials Contributor’s Corner. You’ll get access to the leading online newsletter and database of special situation opportunities. Plus, you will be part of an active community of sophisticated investors that are actively posting opportunities that they find and sharing their experiences with these unique stock transactions.
July has been a really busy month. I spent most of my time avoiding losing money and that was no easy feat in this market.
I closed July out with $12,044.13 in the Special Situations Real Money Port. Back in May, the account was worth $12,239.27. As you can see, I’ve lost a little bit of ground over the past two months. The account is down about $200 since May. However, that’s not too bad considering how the indexes have been dropping.
The good news is that I am still up 26.4% for the year. My internal rate of return (IRR or APY) is an impressive 24.2% since inception, which is exceeding my expectations for this account. To put it in simple terms, I’m up 50.6% on my investment of $8,000 ($2,000 each year since 2004).
Now let’s get to the details about what’s happened this month. In June, I was cashed out of Tribune (TRB) in a tender offer. That deal netted me $90.81 or a 2.8% return after all commissions and fees we taken into consideration. On an average annualized basis, that comes out to 26% for the the 39 days that I held Tribune. This is above my target annualized rate of return, so I was happy.
I took those proceeds from Tribune to purchase 199 shares of BNS Holding Inc. (BNSIA) for $11.75 per share. This position climbed up to $12.75 at one point as a lot of other individual investors started taking advantage of this opportunity. However, BNS Holding pulled a fast one on us. On July 27th, the company issued a press release indicating that it was instructing brokers to not provide for cash payouts to any stockholders holding shares of common stock in street name. Street name is the way shares are typically held if you are using a broker. I was totally caught off guard. I thought this was a done deal since the vote for the going private transaction was already successful and only a few days remained until the August 2nd date to effect the 1 for 200 reverse split. Since the Special Situations Real Money Port is a Coverdell ESA and only a few days remained before the reverse split was to occur, there was no way for me to register these shares in my son’s name in time. Shares of BNSIA plunged as all the street holders tried to sell. I ran into trouble selling my shares due to a technical issue and my busy schedule. I finally was able to sell some of my shares yesterday for $10.75 and I hope the remaining shares get sold for as much soon.
The Special Situations Real Money Port also had a position in Navigant Consulting (NCI). Navigant Consulting was conducting a dutch tender offer that gave preference to odd lot holders before any prorating if the deal was oversubscribed. I estimated that the Navigant Consulting tender would come in somewhere around the midpoint of the offer range of between $19.50 and $22.50. I bought my shares for $20.65, but I only picked up 85 shares on May 10th because the account ran out of cash. I made my tender conditional on the offer being greater than $20.75. Well, the deal came in at $20.50 so my shares weren’t tendered. Then the stock began to sink. By the time I realized that I didn’t want to be a long term holder of NCI I was only able to sell out at $19.50 per share. I lost $111.68 on that trade for being stupid. If I had been smart, I would not have made my tender offer conditional and I would have lost a lot less.
Now that I’ve gotten all that bad news out of the way, I have some excellent results to report about my investment in the Halliburton Co. (HAL) split-off of KBR Inc. (KBR). As you might remember, I bought 99 shares of Halliburton on March 13, 2007 for a total of $3,174.95. I opted to convert these shares to KBR shares in the split-off tender offer made at the time. On April 16th, I received 157 KBR shares for my Halliburton shares. I decided to hold on to this position for a bit since it seemed that the market was mispricing KBR. Sure enough, KBR shares climbed from the low twenties to a high of $36. I placed a stop order at $31 to lock in my gains. Last week when the market tumbled, my shares were sold for $30.90. The total proceeds from that sale were $4,843.80 after commissions. I had a net gain of $1,643.85 (adjust for a $25 tender fee). That’s a 51.8% return on my original investment! Given that it only took 135 days to earn this return, this comes out to a 139% average annualized rate of return for my Halliburton to KBR split-off investment. I can’t wait to find my next split-off opportunity.
If you too are looking for the next split-off opportunity, consider joining Fat Pitch Financials Contributor’s Corner. At Contributor’s Corner you will have access to the latest trades and holdings of the Special Situations Real Money Port. You’ll also have access to the latest going private transactions, odd-lot tender offers, spinoffs, and other special situation opportunities. The members of Contributor’s Corner are very active in the forum where the discussion even includes more traditional value plays in microcaps and Graham net-net stocks. Contributor’s Corner is so active because I reward members with 3 additional days of credit on their subscriptions for the latest updates on special situation opportunities. I’m amazed at how fast members of Contributor’s Corner report on changes and updates to special situation opportunities. It’s hard to beat the collective research of this motivated group for such a reasonable price.
The Special Situations Real Money Portfolio has had another great month. The April Special Situations Real Money Port was up 7.3% for the year and had an annualized rate of return of 22.7% since inception. The May numbers are even more impressive. The Special Situations Real Money Port is now up 16.4% for the year and the annualized rate of return has rocketed up to 27.8%.
Let me recap the trades in the Special Situations Real Money Port this month. I took the cash I received for my MAXCO Inc. (MAXC) shares, and I used it to purchase 99 shares of Tribune Co. (TRB) at $32.76 per share. Tribune announced a tender offer that provided odd lot holders with a preference in the case of any need to prorate the tender offer. My shares were tendered for $34.00 on May 24th and I’m waiting to receive the cash for this nice odd-lot tender offer.
On May 2, 2007, I sold all my shares of Premiere Global Services (PGI) for $12.65 per share. I had bought those shares previously on April 24th for $11.97 per share. This was a nice quick 5% gain. This tender offer was suppose to close on May 24th, but luckily I had a limit order in for the tender price of $12.65 and my limit was triggered early on May 2nd, thus saving me a $25 tendering fee.
I also bought 85 shares of Navigant Consulting Inc. (NCI) on May 10th for $20.65 per share. I would have bought 99 shares of this stock, but I ran out of cash in the account. This tender offer will be closing on June 7th. The dutch auction for this tender has a minimum price of $19.50 and a maximum offer price of $22.50. Hopefully, the offer will come in at the high end of the range.
The most significant change this month has been the rapid appreciation of my KBR Inc. (KBR) shares. My original investment in Haliburton (HAL) before the split-off of KRB was $3,174.95. My KBR ended the month of May valued at $4,322.21. That’s well over a thousand dollar gain so far. I’m considering locking in these gains with a stop order soon.
The bottom line is that the Special Situations Real Money Port ended the month of May with a balance of $12,239.27, of which only $28.66 is in cash. If you would like to see the breakdown in all my current holdings and the complete history of the Special Situations Real Money Port, you can subscribe to Fat Pitch Financials Contributor’s Corner. The subscription will also gain you access to all my research in current going private transactions, odd-lot tender offers, and other special situation opportunities.
The Special Situations Real Money Port has had a great month. It’s gone from being up 7.3% year to date at the beginning of the month to being up a whopping 17.2% for the year by the end of April. Since inception on October 19, 2004, the annualized rate of return for the Special Situations Real Money Portfolio has been 22.7%. By just about any measure, these returns are clearly beating their benchmarks. Now I just need to get this kind of performance out of the Fat Pitch Financials Portfolio.
The Special Situations Real Money Port performed quite well this past quarter. Year to date, the rate of return has been 35.7% IRR, an absolute gain of 7.3% year to date. That strongly beats the S&P 500, which has been up only 0.2%. Actually, my return might be a bit higher than I’m reporting if I assumed my shares of Halliburton (HAL) had already been exchanged for shares of KBR (KBR).
That’s right, the mysterious split-off I mentioned in my previous post was Halliburton. I purchased 99 share of Halliburton on March 13th and then I tendered my shares under the tender offer exchange for KBR. The tender offer provided a discount. For every $1 of HAL accepted for the exchange I would receive approximately $1.08 worth of KBR. I love discounts! On top of it all, odd lot holders (99 shares or less) will not be subject to proration. If I had bought more than 99 shares, I might have had only 40% of my Halliburton shares exchanged.
This past quarter I also sold 600 shares of Western Sizzlin (WSZL) for a 23.4% gain. I sold those shares for $10. The stock is now trading for $12.10, so I guess I missed out on some significantly larger gains. However, my reason for purchasing Western Sizzlin was to learn about rights offerings and that condition no longer exists.
Finally, I bought stock in a company yesterday that is going private, but I made a mistake. The terms of the deal require that you held the stock on the record date. I bought after that date. I didn’t spot that condition, so now I will be selling the stock shortly. Thankfully, I only invested a few hundred dollars on that opportunity.
Finally, my shares of Sally Beauty Holdings (SBH) is performing well. I’m up about 25% on SBH. I’ll be holding tight on this position until the stock hits at least $10.50 to $11.00. Then I’ll reevaluate the intrinsic value of Sally Beauty to determine whether I should sell or hold.
I’m holding $4,236.41 in cash out of my $10,221.14 portfolio. I have a few ideas of where I’ll invest that cash, but I’m also trying to be patient in case any amazing fat pitches come my way.
Western Sizzlin (WSZL) hit my limit price of $10.00 Wednesday, March 7th as a result of Sardar Biglari’s letter to Friendly Ice Cream (FRN) shareholders and Friendly’s decision to consider selling the company, so my 600 shares were sold. As many of you have probably noticed, Western Sizzlin has been part of the Special Situations Real Money Port since last November. I first posted the Western Sizzlin rights offering opportunity on November 22, 2006 in Fat Pitch Financials Contributor’s Corner for subscribers. This was a rather experimental trade for me, but it turned out well and I learned a lot about rights offerings. Read the rest of this entry »
It’s time to update you on the current performance of the Special Situations Real Money Port. The Special Situations Real Money Port is actually my son’s Coverdell Education Savings Account. This portfolio focuses on special situation opportunities including: going private transactions, odd lot tender offers, spin-offs, mergers, rights offerings, and other unique opportunities that may arise to provide individual investors opportunities to exploit market inefficiencies. These opportunities are detailed in Fat Pitch Financials Contributor’s Corner. Read the rest of this entry »
Sally Beauty Holdings (SBH) was up 4.65% today, January 29, 2007. Part of the reason for Sally Beauty’s stock price rise today may be due in part to this past weekend’s Barron’s 2007 Roundtable article($). Sally Beauty Holdings was one of Oscar Schafer’s picks for this year’s roundtable.
Yesterday, I discussed the performance of the Fat Pitch Financials Port. Today, I want to go over the performance of the Special Situations Real Money Port. As some of you may know, the Special Situations Real Money Port is actually my son’s Coverdell Education Savings Account. This portfolio focuses on special situation opportunities including: going private transactions, odd lot tender offers, spin-offs, mergers, rights offerings, and other unique opportunities that may arise to provide individual investors an opportunity to exploit a market inefficiency. These opportunities are detailed in Fat Pitch Financials Contributor’s Corner.
