Special Situations Real Money Port First Quarter 2007 Update

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.

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