Special Situations Real Money Portfolio June 2009 Update

The Special Situations Real Money Portfolio ended the month of June with a record balance of $23,579.28.   That’s up 7.5% from the portfolio balance I reported in the May Special Situations Real Money Portfolio update.

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).