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.
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