Special Situations Real Money Port April 2007 Update

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.

Let’s take a look at what has happened in April. I started the month off on the wrong foot by buying shares of Maxco (MAXC). Maxco announced they were going private and cashing out all odd lot (99 shares or less) shareholders.  However, I missed the fine print.  You can to be an owner of Maxco shares before the record date, March 23, 2007, in order to qualify for the tender offer. Members of Fat Pitch Financials Contributor’s Corner spotted this issue within hours, but it was too late for me. I decided to wait out the sell off that occurred and I set a limit price of $6.45, which was below my purchase price of $6.92.  Amazingly, yesterday morning at the opening bell, my broker sent me a message that my limit price was met and that they actually sold my shares for $7.50.  It does not appear to have been a public trade, so I’m guessing that my broker sold the shares to another customer in the firm or directly to another firm.  Maybe someone here can enlighten me more on how this trade could have happened. Regardless, I was real lucky on this one.  What should have been a loss due to my mistake from careless reading, turned out to be a nice profit.

Looking at another position, my 99 shares of Halliburton (HAL) were finally converted to shares of KRB (KBR) as a result of the split off transaction. All 99 shares of Halliburton were tendered and I received 157 shares of KBR on April 16th. This conversion gave the value of my Halliburton position a nice 8% bump. Since KBR is a spin-off now, I am holding on to these shares for a little while longer to see if I can also earn some additional return from the spinoff effect.

Finally, I also purchase shares of a company that is buying back shares in a tender offer that includes a preference for odd lot holders.  I bought 99 of these shares at $11.97 per share and I expect to be cashed out of all of these shares in about a month at $12.65 per share.

After these transactions, the Special Situations Real Money Port ended the month with a value of $11,165.57, $3,771.12 of which is in cash that will be invested shortly in an additional odd-lot tender offer opportunity at a big newspaper.

If you are interested in this odd-lot tender offer opportunity, consider signing up for Contributor’s Corner where you will also get details on other odd lot tender offers, going private transactions, spinoffs, split-offs and other unique special situations. In addition, you will be part of a high quality, motivated (3 days of subscription credit given for news posts), experienced community of individual investors searching for special situation opportunities.