Click on table to enlarge.
Showing posts with label MANDA Portfolio. Show all posts
Showing posts with label MANDA Portfolio. Show all posts
Monday, April 27, 2009
Monday, April 6, 2009
MANDA Weekend Update
A little late getting this out, but here it is.
Exar Corporation (Nasdaq: EXAR) successfully completed its acquistion of hi/fn, Inc. (Nasdaq: HIFN) at $4 per share as of midnight April 2nd. This transaction is reflected in the latest MANDA portfolio holdings shown below.
Note that in the MANDA portfolio as well as in the Channeling Stocks portfolio, the realized return is based on a total portfolio value equal to exactly that of the current holdings (where each holding is of equal dollar value). If a static portfolio value is assumed (say a $100,000), the realized return will be a different number (either more or less). There's no one correct way to calculate the theoretical total return. I prefer the former method for a couple of reasons: it's easier to calculate and easier to demonstrate, i.e., the reader can see exactly how each trade performed.
Click on table to enlarge.
Exar Corporation (Nasdaq: EXAR) successfully completed its acquistion of hi/fn, Inc. (Nasdaq: HIFN) at $4 per share as of midnight April 2nd. This transaction is reflected in the latest MANDA portfolio holdings shown below.
Note that in the MANDA portfolio as well as in the Channeling Stocks portfolio, the realized return is based on a total portfolio value equal to exactly that of the current holdings (where each holding is of equal dollar value). If a static portfolio value is assumed (say a $100,000), the realized return will be a different number (either more or less). There's no one correct way to calculate the theoretical total return. I prefer the former method for a couple of reasons: it's easier to calculate and easier to demonstrate, i.e., the reader can see exactly how each trade performed.
Click on table to enlarge.
Wednesday, April 1, 2009
Channeling Stocks & MANDA Updates
I was off-site yesterday meeting with my web developer and did not get a chance to post the updates to the new Channeling Stocks Portfolio and to the MANDA Portfolio which is an M&A fund.
Channeling Stocks additions and subtractions
It's either a bad twist of fate of a cruel April Fool's joke, but the market has been going against the grain of this portfolio where the holdings are all on the short side. (Although I'm long the SKF, it is a bear ETF.) Stop losses were triggered today on Goldman Sachs (GS) and Roper Industries (ROP), but I only got rid of Goldman. I'm keeping Roper because I believe the stop loss was set too low. I'm raising it to $44 near the top of its channel. This will allow the stock a bit more "wiggle" room. Today's gain came on very low volume which leads me to believe that there's not a lot of investor confidence in the up direction. We'll see. As I said, this is going to be a learning experience for both of us and I'm doing this so you can see the thought processes that go into my choices. This isn't as easy as it looks!
Long entry points were established on two stock candidates: Huaneng Power (HNP) and Sohu (SOHU), both Chinese companies. Huaneng was picked up yesterday at its closing price of $26.85. The target price is $30 and $25 is the stop loss.
Sohu was acquired today at its closing price of $43.63. Its price target is $50 with a $40 stop loss.
MANDA update
No new additions have been made to the M&A portfolio but one merger was completed this week. Private equity investment group JLL Partners completed there acquisition of Pharmanet Development (PDGI) on Monday. Shareholders of PDGI received $5 in cash per share. In the MANDA portfolio, this represents an 8.7% gain on the transaction.
The updated portfolios will be posted on Friday (or over the weekend).
Now back to researching today's blog which I'm hoping will be out early this evening.
Channeling Stocks additions and subtractions
It's either a bad twist of fate of a cruel April Fool's joke, but the market has been going against the grain of this portfolio where the holdings are all on the short side. (Although I'm long the SKF, it is a bear ETF.) Stop losses were triggered today on Goldman Sachs (GS) and Roper Industries (ROP), but I only got rid of Goldman. I'm keeping Roper because I believe the stop loss was set too low. I'm raising it to $44 near the top of its channel. This will allow the stock a bit more "wiggle" room. Today's gain came on very low volume which leads me to believe that there's not a lot of investor confidence in the up direction. We'll see. As I said, this is going to be a learning experience for both of us and I'm doing this so you can see the thought processes that go into my choices. This isn't as easy as it looks!
Long entry points were established on two stock candidates: Huaneng Power (HNP) and Sohu (SOHU), both Chinese companies. Huaneng was picked up yesterday at its closing price of $26.85. The target price is $30 and $25 is the stop loss.
Sohu was acquired today at its closing price of $43.63. Its price target is $50 with a $40 stop loss.
MANDA update
No new additions have been made to the M&A portfolio but one merger was completed this week. Private equity investment group JLL Partners completed there acquisition of Pharmanet Development (PDGI) on Monday. Shareholders of PDGI received $5 in cash per share. In the MANDA portfolio, this represents an 8.7% gain on the transaction.
The updated portfolios will be posted on Friday (or over the weekend).
Now back to researching today's blog which I'm hoping will be out early this evening.
Tuesday, March 24, 2009
MANDA Update + New Portfolios
I'm busy working on two new portfolios that will be introduced shortly which is why today's blog is rather thread-bare. But I do want to alert all of you who are following my M&A portfolio (MANDA) that portfolio constituent, Aladdin Knowledge Systems (ALDN) today completed its merger with private equity group Vector Capital. Aladdin shareholders will receive $11.50 in cash per share. This represents a 5.3% return on the trade. Overall, the MANDA portfolio is up 2.6% since 6/26/08 inception. Compare that with -37% on the S&P 500. Woo-hoo!
Here's the list of all open and closed MANDA trades since portfolio inception.
[Click on table to enlarge.]
Here's the list of all open and closed MANDA trades since portfolio inception.
[Click on table to enlarge.]
Friday, March 13, 2009
MANDA Updated Table
The table below reflects today's addition of Enpointe Technologies, ENPT. This addition is discussed in an earlier article posted today.
(Click on table to enlarge.)
(Click on table to enlarge.)
Another MANDA addition: Enpointe (ENPT)
Yesterday, Enpointe Technologies (ENPT), a global business-to-business IT provider, agreed to be acquired by its founder and CEO Attiazaz (“Bob”) Din and his family for $2.50 in cash per share. The Din family are major shareholders owning about 26% of the outstanding shares of common stock.
The board approved the merger and is recommending shareholder approval. There is a 30 day “go shop” clause in the agreement whereby a special committee representing the company can solicit higher bids. Closure of the deal is dependent upon the usual customary requirements such as regulatory and shareholder approval as well as debt financing by Mr. Din who has already supplied a letter of commitment.
The company has made no statement as to when the transaction might close but I'm guessing near the end of the second quarter or the beginning of the third. I added the stock today to the MANDA portfolio at a price of $2.20 which represents a 13.6% return upon deal completion.
The MANDA portfolio table will be updated shortly to reflect the addition.
The board approved the merger and is recommending shareholder approval. There is a 30 day “go shop” clause in the agreement whereby a special committee representing the company can solicit higher bids. Closure of the deal is dependent upon the usual customary requirements such as regulatory and shareholder approval as well as debt financing by Mr. Din who has already supplied a letter of commitment.
The company has made no statement as to when the transaction might close but I'm guessing near the end of the second quarter or the beginning of the third. I added the stock today to the MANDA portfolio at a price of $2.20 which represents a 13.6% return upon deal completion.
The MANDA portfolio table will be updated shortly to reflect the addition.
Monday, March 9, 2009
MANDA Updated Table
Based on today's addition of Gevity (GVHR) as discussed in the article below, here's the updated MANDA holdings.
[Click image for larger view.]
[Click image for larger view.]
M&A & Channeling Stock Updates
New MANDA addition
I don't know how I missed this one but last Thursday human resource services company Gevity (GVHR) agreed to be taken private by the TriNet Group in an all-cash deal worth $4 a share nearly doubling the previous day's closing price. (The stock hasn't been above $4 since last November after falling well off it's $30 high set back in 2006.)
The deal has the approval of both boards as well as two of its major shareholders, ValueAct Capital Management LP and General Atlantic LLC which own over 13% and 9% of outstanding shares respectively. General Atlantic also happens to be TriNet's biggest shareholder. Pending Gevity shareholder approval, the deal is expected to close in the second quarter. An analyst at Roth Capital Partners said that he expects shareholders to approval the deal.
In a statement released by the company, Gevity will be paying a special 5 cent dividend on April 30th to shareholders on record as of April 16th. In light of the merger, the board postponed their annual shareholder meeting from May 20th to a time as yet to be determined.
I have a good feeling that this merger will succeed and I added the stock today at $3.78 to my M&A portfolio, MANDA. Including the proposed $0.05 dividend, this trade will yield 7.1%.
Good news on the Dow/Rohm-Haas front
The threat of a lawsuit brought by Rohm-Haas (ROH) against Dow Chemical for failure to complete their merger within the allotted time finally forced Dow into a pow-wow with the chieftains at Rohm. This was a tough one for kimosabe Dow since the financing they expected from the Kuwaiti government unexpectedly fell through and paying the proposed $78/share for Rohm stock would have put Dow's credit rating and viability as a company in serious jeopardy.
The trial was all set to commence this morning but proceedings were halted twice by the judge. Both companies finally agreed to proceed with the merger as planned especially since Warren Buffett and the Kuwaiti government both rode in on white horses throwing $3 billion and $1 billion respectively into the kitty. The two largest shareholders in Rohm-Haas also agreed to pony up $2.5 billion in Dow preferred shares plus an additional $500 million in cash. Rohm shareholders will receive their $78 per share plus proceeds from the almost $3 million per day penalty fee that Dow has racked up for not closing the deal on time.
The acquisition is set to close no later than April 1st. Let's hope this won't be an April Fool's joke on us Rohm stock holders. (ROH is a MANDA holding.)
Other Big Pharma deals
On January 23rd, Wyeth (WYE) agreed to be acquired by Pfizer (PFE) for $68 billion in a cash and stock swap deal ($33 in cash plus 0.985 shares of Pfizer). One third of the deal is being financed by banks who said they will withhold financing if Pfizer's credit rating drops below a certain level. Since the deal was announced, shares of Pfizer have dropped 25%. I don't like buying into deals involving stock swaps, especially in this negative market climate.
Two big deals today—one done and one in the works. Merck (MRK) picked up Schering-Plough (SGP) in a $41 billion cash and stock swap deal ($10.50 in cash plus 0.5767 shares of Merck). I'm not taking this one for the same reason given above.
The Wall Street Journal has just reported that the board of Genentech (DNA) is seriously considering Swiss-based drug giant Roche's $95/share bid representing a $46.7 billion deal. This deal isn't struck as of this writing and I'll be scrutinizing the terms if and when it's offered. Roche already owns 56% of DNA stock and has been trying to buy it for months.
Note: My blog on 11/4/08 cites other potential takeover candidates in the drug sector. Here are the eight stocks that I felt were attractive targets: BIIB, CRL, DNA, GENZ, GILD, LIFE, and TECH.
Channeling stocks update
For those of you following my Channeling Stock Breakout recipe, two stocks broke their lower support channels today: SWS Group (SWS) and Roper Industries (ROP). Bearish positions can be taken on these two and they're both optionable (watch out for light liquidity). Recent channeling breakdowns, Oracle (ORCL) and Paccar (PCAR) are both continuing strongly to the downside.
Tomorrow I'll be looking at a defensive play and by ”defensive” I mean it in more ways than one. You'll see.
I don't know how I missed this one but last Thursday human resource services company Gevity (GVHR) agreed to be taken private by the TriNet Group in an all-cash deal worth $4 a share nearly doubling the previous day's closing price. (The stock hasn't been above $4 since last November after falling well off it's $30 high set back in 2006.)
The deal has the approval of both boards as well as two of its major shareholders, ValueAct Capital Management LP and General Atlantic LLC which own over 13% and 9% of outstanding shares respectively. General Atlantic also happens to be TriNet's biggest shareholder. Pending Gevity shareholder approval, the deal is expected to close in the second quarter. An analyst at Roth Capital Partners said that he expects shareholders to approval the deal.
In a statement released by the company, Gevity will be paying a special 5 cent dividend on April 30th to shareholders on record as of April 16th. In light of the merger, the board postponed their annual shareholder meeting from May 20th to a time as yet to be determined.
I have a good feeling that this merger will succeed and I added the stock today at $3.78 to my M&A portfolio, MANDA. Including the proposed $0.05 dividend, this trade will yield 7.1%.
Good news on the Dow/Rohm-Haas front
The threat of a lawsuit brought by Rohm-Haas (ROH) against Dow Chemical for failure to complete their merger within the allotted time finally forced Dow into a pow-wow with the chieftains at Rohm. This was a tough one for kimosabe Dow since the financing they expected from the Kuwaiti government unexpectedly fell through and paying the proposed $78/share for Rohm stock would have put Dow's credit rating and viability as a company in serious jeopardy.
The trial was all set to commence this morning but proceedings were halted twice by the judge. Both companies finally agreed to proceed with the merger as planned especially since Warren Buffett and the Kuwaiti government both rode in on white horses throwing $3 billion and $1 billion respectively into the kitty. The two largest shareholders in Rohm-Haas also agreed to pony up $2.5 billion in Dow preferred shares plus an additional $500 million in cash. Rohm shareholders will receive their $78 per share plus proceeds from the almost $3 million per day penalty fee that Dow has racked up for not closing the deal on time.
The acquisition is set to close no later than April 1st. Let's hope this won't be an April Fool's joke on us Rohm stock holders. (ROH is a MANDA holding.)
Other Big Pharma deals
On January 23rd, Wyeth (WYE) agreed to be acquired by Pfizer (PFE) for $68 billion in a cash and stock swap deal ($33 in cash plus 0.985 shares of Pfizer). One third of the deal is being financed by banks who said they will withhold financing if Pfizer's credit rating drops below a certain level. Since the deal was announced, shares of Pfizer have dropped 25%. I don't like buying into deals involving stock swaps, especially in this negative market climate.
Two big deals today—one done and one in the works. Merck (MRK) picked up Schering-Plough (SGP) in a $41 billion cash and stock swap deal ($10.50 in cash plus 0.5767 shares of Merck). I'm not taking this one for the same reason given above.
The Wall Street Journal has just reported that the board of Genentech (DNA) is seriously considering Swiss-based drug giant Roche's $95/share bid representing a $46.7 billion deal. This deal isn't struck as of this writing and I'll be scrutinizing the terms if and when it's offered. Roche already owns 56% of DNA stock and has been trying to buy it for months.
Note: My blog on 11/4/08 cites other potential takeover candidates in the drug sector. Here are the eight stocks that I felt were attractive targets: BIIB, CRL, DNA, GENZ, GILD, LIFE, and TECH.
Channeling stocks update
For those of you following my Channeling Stock Breakout recipe, two stocks broke their lower support channels today: SWS Group (SWS) and Roper Industries (ROP). Bearish positions can be taken on these two and they're both optionable (watch out for light liquidity). Recent channeling breakdowns, Oracle (ORCL) and Paccar (PCAR) are both continuing strongly to the downside.
Tomorrow I'll be looking at a defensive play and by ”defensive” I mean it in more ways than one. You'll see.
Tuesday, February 24, 2009
MANDA Updated Table
This table incorporates today's additions of NCX and HIFN.
Click on table to enlarge.
Click on table to enlarge.
MANDA Portfolio Additions: NCX & HIFN
It looks as if M&A activity isn't completely dead. Yesterday, Abu Dhabi state-owned International Petroleum Investment Co (IPIC) launched a $500 million takeover of Nova Chemicals on Monday in an effort to rescue the Canadian-based plastics maker from drowning in debt. Note that Nova trades both on the Toronto exchange and on the NYSE under ticker symbol NCX. Under the proposed terms of this friendly deal, IPIC will pay NCX shareholders (US) $6 per share in cash with the caveat that at least two-thirds of the shares are tendered.
Looking at the chart of NCX yesterday (shown below), my first thought was that too many people already owned the shares at higher prices and would be loathe to part with them at a loss. But last night I looked at the chart again and noticed the substantial rise in trading volume in recent weeks. Adding up the daily volumes, I found that more shares than the float (approximately 85.6million versus a float of 82.6 million shares) had been traded since 1/21/09 when the stock price began trading under $5. The stock hit a low of a buck and change on 2/3 and has stayed below the $2 mark until yesterday when the acquisition was announced. With more than the float changing hands below $5, this was the reassurance I needed to jump in at today's opening price of $5.20.
Right after my purchase of NCX, I bought shares of Hifn (NASDAQ: HIFN) for $3.80, a maker of processors used in network and data storage security. Chip maker Exar (NASDAQ: EXAR) agreed to buy all Hifn stock giving Hifn shareholders the choice to receive 0.3529 shares of Exar plus $1.60 per share in cash, or $4 a share. Based on $4/share, the deal is worth $58.9 million. It has been unanimously approved by both boards and is expected to close early in the second quarter.
The MANDA portfolio table will be updated to reflect these new additions.
Looking at the chart of NCX yesterday (shown below), my first thought was that too many people already owned the shares at higher prices and would be loathe to part with them at a loss. But last night I looked at the chart again and noticed the substantial rise in trading volume in recent weeks. Adding up the daily volumes, I found that more shares than the float (approximately 85.6million versus a float of 82.6 million shares) had been traded since 1/21/09 when the stock price began trading under $5. The stock hit a low of a buck and change on 2/3 and has stayed below the $2 mark until yesterday when the acquisition was announced. With more than the float changing hands below $5, this was the reassurance I needed to jump in at today's opening price of $5.20.
Right after my purchase of NCX, I bought shares of Hifn (NASDAQ: HIFN) for $3.80, a maker of processors used in network and data storage security. Chip maker Exar (NASDAQ: EXAR) agreed to buy all Hifn stock giving Hifn shareholders the choice to receive 0.3529 shares of Exar plus $1.60 per share in cash, or $4 a share. Based on $4/share, the deal is worth $58.9 million. It has been unanimously approved by both boards and is expected to close early in the second quarter.
The MANDA portfolio table will be updated to reflect these new additions.
Friday, February 20, 2009
Updated MANDA Holdings
Since my last update, two companies have completed their mergers: ANL on 2/18 and PSD on 2/6. Note that a prorated dividend of $0.04448/share was paid on PSD.
Needless to say that because of the uncertain market and credit climates, M&A activity has come to a virtual halt which is the reason for the paucity of portfolio holdings. At least the fund is operating in the black, but there's still the wild card of Dow Chemical's acquisition of Rohm-Haas. There's been no news from Dow as to what they're going to do but not closing the deal is costing them $90 million a month. Dow recently slashed its dividend and cut 5,000 employees as part of their cost-cutting efforts.
(Click on table to enlarge.)
Needless to say that because of the uncertain market and credit climates, M&A activity has come to a virtual halt which is the reason for the paucity of portfolio holdings. At least the fund is operating in the black, but there's still the wild card of Dow Chemical's acquisition of Rohm-Haas. There's been no news from Dow as to what they're going to do but not closing the deal is costing them $90 million a month. Dow recently slashed its dividend and cut 5,000 employees as part of their cost-cutting efforts.
(Click on table to enlarge.)
Tuesday, February 3, 2009
MANDA Portfolio Addition: PharmaNet (PDGI)
PharmaNet Development Group Inc. (PDGI), a drug development services company, announced earlier today it has agreed to a $100 million acquisition by affiliates of JLL Partners Inc., a New York-based private equity investment firm. This is an all-cash deal set at $5 per PDGI share. The acquisition has the approval of the PDGI board and is expected to close by the end of the first quarter.
The transaction, which values PharmaNet's stock at about $100 million, will be financed by a $250 million equity commitment from JLL. The company said the financing includes the funds to retire the $144 million principal of its outstanding convertible notes.
This looks like a solid deal to me so I picked up some PDGI shares for my MANDA (M&A) portfolio today for $4.60 giving a return of 8.7%.
Other MANDA news
MANDA component Rohm-Haas (ROH) yesterday declared a quarterly dividend of $0.41/share payable on March 2 to shareholders on record as of February 13. (So far in the portfolio, ROH has paid $1.23 per share in dividends.)
Company officials, miffed at acquiring company Dow Chemical's toe-dragging in regards to closing the deal, today sent a strong “Get your act together or else!” message to Dow's board. If push comes to shove, it doesn't look good for the big guy as the terms of the deal put all of the onus on Dow. On the flip side, you can't withdraw money from an empty bank, so where this deal stands at the moment is anyone's guess.
Here's the updated MANDA portfolio (click to enlarge table):
The transaction, which values PharmaNet's stock at about $100 million, will be financed by a $250 million equity commitment from JLL. The company said the financing includes the funds to retire the $144 million principal of its outstanding convertible notes.
This looks like a solid deal to me so I picked up some PDGI shares for my MANDA (M&A) portfolio today for $4.60 giving a return of 8.7%.
Other MANDA news
MANDA component Rohm-Haas (ROH) yesterday declared a quarterly dividend of $0.41/share payable on March 2 to shareholders on record as of February 13. (So far in the portfolio, ROH has paid $1.23 per share in dividends.)
Company officials, miffed at acquiring company Dow Chemical's toe-dragging in regards to closing the deal, today sent a strong “Get your act together or else!” message to Dow's board. If push comes to shove, it doesn't look good for the big guy as the terms of the deal put all of the onus on Dow. On the flip side, you can't withdraw money from an empty bank, so where this deal stands at the moment is anyone's guess.
Here's the updated MANDA portfolio (click to enlarge table):
Thursday, January 15, 2009
Correction to MANDA Portfolio
I've been slaving over a blog which I've been hoping to finish each day, but just when I think I'm done I find something else to add. The process has been much slower going than I had hoped so my apologies for the lack of blogs this week. (I also have to admit to taking some much-needed time off, too.) However, in the course of my investigations, I discovered an incorrect entry in the MANDA portfolio table: I purchased Bluegreen Corp. (BXG) on July 22, not July 2. The only difference this makes to the numbers is in the calculation of the annualized return.
MANDA tables from here on will be corrected.
MANDA tables from here on will be corrected.
Monday, January 12, 2009
MANDA Portfolio Table: Updated as of 1-12-09
The table below shows today's addition of Aladdin Knowledge Systems (ALDN).
Click on table to enlarge.
Update 1/15/09: Please note that the entry date for BXG is incorrect: it should be 7/22/08 instead of 7/02/08. Future tables will be correct.
Click on table to enlarge.
Update 1/15/09: Please note that the entry date for BXG is incorrect: it should be 7/22/08 instead of 7/02/08. Future tables will be correct.
Another Manda Addition: Aladdin Knowledge Systems (ALDN)
MANDA addition: Aladdin Knowledge Systems (ALDN)
The New Year is ringing in with a bit of a surge in M & A activity, much to my delight. My MANDA fund holdings have been drying up and today I'm pleased to make a new addition to it: Aladdin Knowledge Systems (ALDN).
Here's a summary of the proposed transaction from Barron's Online: "Aladdin Knowledge Systems (ALDN) an Israeli-based security software company, this morning announced that it has agreed to be acquired by an investor group led by private equity firm Vector Capital in a deal valued at about $160 million.
Aladdin holders will receive $11.50 a share in cash, about a 20% premium to Friday’s closing price, and a 64% premium to the closing price on January 5, when Aladdin announced that it was in talks with Vector on a possible deal.
Vector Capital said it will place Aladdin’s DRM and authentication assets under common management with another one of its companies, SafeNet.
The deal is not subject to any financing condition. The deal is expected to close in 2-3 months."
The boards of both companies have approved the deal and Wells Fargo will be providing debt financing to support the acquisition. The merger is subject to the approval of Aladdin's shareholders as well as the usual antitrust regulatory approval.
I picked up the stock today at $10.92. This represents a 5.3% return on the transaction for a 20-30% annualized return, depending on when the deal actually closes.
Other M&A activity
Earlier today Abbott Labs (ABT) announced that it will be buying Advanced Medical Optics (EYE) for $22 per share in cash in an effort to expand Abbott's medical footprint into the laser vision correction and eye care arenas. The merger is expected to be completed before the end of the first quarter. This deal is yet another example of cash-rich big pharma buying up those quality smaller firms that have been badly beaten down. Expect more acquisitions of this type to continue.
I did not purchase EYE today because it traded above $21.48 which represents only a 2.4% return at best. Call me a pig but I'd like more. If the price drops to the low $21.20s I could be tempted into buying it.
By the way, Abbott stock has been channeling between $50 and $60. (See chart below.) Currently, it's sitting at $50 and if you're into playing channeling stocks, as soon as the stock moves up a bit, I'd jump in. (For you options players, a bull-call 50/55 or even 50/60 debit spread would be a good move. The reason I chose a spread over a straight call is that the spread mitigates the effect of volatility.) However, if the stock breaks $50 watch out below! The $50 level represents major support and if it violates that, then a short position is quite justified.
The New Year is ringing in with a bit of a surge in M & A activity, much to my delight. My MANDA fund holdings have been drying up and today I'm pleased to make a new addition to it: Aladdin Knowledge Systems (ALDN).
Here's a summary of the proposed transaction from Barron's Online: "Aladdin Knowledge Systems (ALDN) an Israeli-based security software company, this morning announced that it has agreed to be acquired by an investor group led by private equity firm Vector Capital in a deal valued at about $160 million.
Aladdin holders will receive $11.50 a share in cash, about a 20% premium to Friday’s closing price, and a 64% premium to the closing price on January 5, when Aladdin announced that it was in talks with Vector on a possible deal.
Vector Capital said it will place Aladdin’s DRM and authentication assets under common management with another one of its companies, SafeNet.
The deal is not subject to any financing condition. The deal is expected to close in 2-3 months."
The boards of both companies have approved the deal and Wells Fargo will be providing debt financing to support the acquisition. The merger is subject to the approval of Aladdin's shareholders as well as the usual antitrust regulatory approval.
I picked up the stock today at $10.92. This represents a 5.3% return on the transaction for a 20-30% annualized return, depending on when the deal actually closes.
Other M&A activity
Earlier today Abbott Labs (ABT) announced that it will be buying Advanced Medical Optics (EYE) for $22 per share in cash in an effort to expand Abbott's medical footprint into the laser vision correction and eye care arenas. The merger is expected to be completed before the end of the first quarter. This deal is yet another example of cash-rich big pharma buying up those quality smaller firms that have been badly beaten down. Expect more acquisitions of this type to continue.
I did not purchase EYE today because it traded above $21.48 which represents only a 2.4% return at best. Call me a pig but I'd like more. If the price drops to the low $21.20s I could be tempted into buying it.
By the way, Abbott stock has been channeling between $50 and $60. (See chart below.) Currently, it's sitting at $50 and if you're into playing channeling stocks, as soon as the stock moves up a bit, I'd jump in. (For you options players, a bull-call 50/55 or even 50/60 debit spread would be a good move. The reason I chose a spread over a straight call is that the spread mitigates the effect of volatility.) However, if the stock breaks $50 watch out below! The $50 level represents major support and if it violates that, then a short position is quite justified.
Tuesday, January 6, 2009
MANDA Portfolio Update: SM&A, Lincoln Bancorp, Rohm-Haas
Just a quick update to my M&A portfolio. All figures will be updated in the MANDA portfolio table either later today or tomorrow.
SM&A acquisition completed
Private equity firm Odyssey Investment Partners completed its acquisition of SM&A (WINS) on December 29th in a $6.25 per share all-cash deal. This represents an 11.4% return on the investment.
Lincoln Bancorp announces dividend.
On December 18th, Lincoln Bancorp (LNCB) announced a 7 cent per share dividend payable on January 15th to shareholders on record as of December 31st. The dividend was cut in half because of declining economic conditions and the desire to preserve capital, according to the company's CEO.
Lincoln Bancorp merger completed with First Merchant's
First Merchant's (FRME) takeover of Lincoln Bancorp (LNCB) was completed on January 2nd. One share of LNCB was swapped for 0.7004 shares of FRME. The shares of FRME were sold today at a price of $22.91. This represents a 14.7% return without the dividends and 16.3% including dividends.
Bullish play on Rohm-Haas
I took advantage of the high options volatility as well as today's slump in Rohm-Haas stock (ROH) and sold 2 January 50 put contracts (ROHMJ) for $3. Takeover company Dow Chemical (DOW) announced that it's threatening to sue the Kuwaiti government for backing out of a joint venture deal whose monies were slated to be used in part to finance the Rohm-Haas acquisition. Dow has until this Saturday to complete the current $78/share all-cash merger with Rohm-Haas, and if Dow starts dragging its feet, substantial penalties will kick in. I'm sure the company will try not to make that happen.
The put contracts are $10 out of the money. The $50 price level is about where the company was trading at in July before the acquisition announcement so I feel that all-in-all the risk here is limited. If not, then I'll either buy back the puts or else be happy to have the stock put to me at $50. Most likely I'll know where I stand come next Monday.
NOTE: The ROH put was executed in my own portfolio and not in the Manda portfolio. However, buying a protective put when the stock fell below $70 would have been prudent and I can only say that considering this economic environment, it was my bad. I also should have done the same with Bluegreen as that was an overpriced deal from the get-go. I will try very hard not to make this error in judgment again.
SM&A acquisition completed
Private equity firm Odyssey Investment Partners completed its acquisition of SM&A (WINS) on December 29th in a $6.25 per share all-cash deal. This represents an 11.4% return on the investment.
Lincoln Bancorp announces dividend.
On December 18th, Lincoln Bancorp (LNCB) announced a 7 cent per share dividend payable on January 15th to shareholders on record as of December 31st. The dividend was cut in half because of declining economic conditions and the desire to preserve capital, according to the company's CEO.
Lincoln Bancorp merger completed with First Merchant's
First Merchant's (FRME) takeover of Lincoln Bancorp (LNCB) was completed on January 2nd. One share of LNCB was swapped for 0.7004 shares of FRME. The shares of FRME were sold today at a price of $22.91. This represents a 14.7% return without the dividends and 16.3% including dividends.
Bullish play on Rohm-Haas
I took advantage of the high options volatility as well as today's slump in Rohm-Haas stock (ROH) and sold 2 January 50 put contracts (ROHMJ) for $3. Takeover company Dow Chemical (DOW) announced that it's threatening to sue the Kuwaiti government for backing out of a joint venture deal whose monies were slated to be used in part to finance the Rohm-Haas acquisition. Dow has until this Saturday to complete the current $78/share all-cash merger with Rohm-Haas, and if Dow starts dragging its feet, substantial penalties will kick in. I'm sure the company will try not to make that happen.
The put contracts are $10 out of the money. The $50 price level is about where the company was trading at in July before the acquisition announcement so I feel that all-in-all the risk here is limited. If not, then I'll either buy back the puts or else be happy to have the stock put to me at $50. Most likely I'll know where I stand come next Monday.
NOTE: The ROH put was executed in my own portfolio and not in the Manda portfolio. However, buying a protective put when the stock fell below $70 would have been prudent and I can only say that considering this economic environment, it was my bad. I also should have done the same with Bluegreen as that was an overpriced deal from the get-go. I will try very hard not to make this error in judgment again.
Tuesday, December 23, 2008
Another MANDA addition: American Land Lease (ANL)
Bad year for M&A activity
The fact that 2008 has been a bad year for mergers and acquisitions is a “duh” type of statement, but the extent of withdrawn deals is noteworthy because it is unprecedented. According to a Reuters article published this morning, M&A activity is down 35% globally with over 1100 deals canceled which is 300 more than were canceled last year. Estimated total value of the withdrawn deals is around $800 billion with underwriting banks losing more than $815 million in fees. JPMorgan-Chase (JPM) and Goldman Sachs (GS) lost an estimated $73M and $64M in fees respectively. Guess they really did need a bailout.
Brighter prospects for next year
The good news is that many M&A experts feels the worst is behind us and things can only get better. Hoping that will be the case, I took another plunge into the M&A market and picked up some shares of American Land Lease (ANL) today at $13.30 per share. The proposed acquisition was announced a couple of weeks ago on December 10th. Expecting to close in the first quarter of next year, the all cash deal is for $14.20 per share. Just after the merger was announced, ANL was trading around $12.60. Although the terms of the deal sounded viable, I was skeptical for two reasons. The first was that market volatility as given by the VIX was still extremely high and I wasn't sure at the time where it was heading. (Market volatility measures not only market risk but lately has been paralleling credit risk.) The other reason was that I got burned previously on another real-estate acquisition—BlueGreen Corp. (BXG)--that didn't pan out and I wasn't eager to make a similar mistake. (It was one of those canceled deals.)
So what changed my mind?
What changed my mind was the fact that ANL's stock price has been steadily rising on much heavier than normal volume ever since the deal was announced. (Average daily volume is 83000.) Most likely this is the result of the terms of the deal which states that the acquiring company, private equity firm Green Courte Partners, must own at least 88% of ANL's outstanding shares. This reassured me that Green Courte seems to be serious about the acquisition and gave me enough courage to buy the stock today. If the deal does go through in the next month or so as projected (keeping my fingers crossed), I expect to make a tidy 6.8% profit which translates into an annual return of roughly 80%.
Other MANDA news
The current MANDA chart listed under the MANDA portfolio is not up-to-date. The return values don't reflect recent dividends. It'll be updated later today and include the addition of ANL.
The fact that 2008 has been a bad year for mergers and acquisitions is a “duh” type of statement, but the extent of withdrawn deals is noteworthy because it is unprecedented. According to a Reuters article published this morning, M&A activity is down 35% globally with over 1100 deals canceled which is 300 more than were canceled last year. Estimated total value of the withdrawn deals is around $800 billion with underwriting banks losing more than $815 million in fees. JPMorgan-Chase (JPM) and Goldman Sachs (GS) lost an estimated $73M and $64M in fees respectively. Guess they really did need a bailout.
Brighter prospects for next year
The good news is that many M&A experts feels the worst is behind us and things can only get better. Hoping that will be the case, I took another plunge into the M&A market and picked up some shares of American Land Lease (ANL) today at $13.30 per share. The proposed acquisition was announced a couple of weeks ago on December 10th. Expecting to close in the first quarter of next year, the all cash deal is for $14.20 per share. Just after the merger was announced, ANL was trading around $12.60. Although the terms of the deal sounded viable, I was skeptical for two reasons. The first was that market volatility as given by the VIX was still extremely high and I wasn't sure at the time where it was heading. (Market volatility measures not only market risk but lately has been paralleling credit risk.) The other reason was that I got burned previously on another real-estate acquisition—BlueGreen Corp. (BXG)--that didn't pan out and I wasn't eager to make a similar mistake. (It was one of those canceled deals.)
So what changed my mind?
What changed my mind was the fact that ANL's stock price has been steadily rising on much heavier than normal volume ever since the deal was announced. (Average daily volume is 83000.) Most likely this is the result of the terms of the deal which states that the acquiring company, private equity firm Green Courte Partners, must own at least 88% of ANL's outstanding shares. This reassured me that Green Courte seems to be serious about the acquisition and gave me enough courage to buy the stock today. If the deal does go through in the next month or so as projected (keeping my fingers crossed), I expect to make a tidy 6.8% profit which translates into an annual return of roughly 80%.
Other MANDA news
The current MANDA chart listed under the MANDA portfolio is not up-to-date. The return values don't reflect recent dividends. It'll be updated later today and include the addition of ANL.
Thursday, November 20, 2008
MANDA Holdings as of 11/20/08
Update includes the new listing SM&A (symbol: WINS).
Click on image for larger view.
Click on image for larger view.
Market Levels & Another MANDA Addition
Index support levels
Well, it looks like the VIX is continuing its uphill march closing over 80 today, up almost 9%. As the VIX shoots up, so plummets the market. Major market averages closed down 5-7%. The only intelligent thing I can say from looking at their charts is that from a bullish standpoint they all completely suck...and it appears that they are going continue to suck. ("Suck" is the financial technical term for really really really awful.)
So, what are the next support levels?
Unfortunately, pretty far away. In fact, I can't even give you a number on the Dow Industrials and the OEX (S&P 100) because they've both surpassed their ten year support levels and I don't have data going back any further. The good news is that I can give you support levels for the other indices:
S&P 500 ($752): Minor support is at 670. The next major support level is at—no, you don't want to know. (Okay, it's at 470.)
Nasdaq ($1316): The Nazzie is right on major support. Next stop is 1175, but I do think we could see it brush 1000. Remember Nasdaq 5000?
Dow Transports ($299): Minor support levels are 285, 250, and 215-220. Next major support is 200. Let's hope it doesn't come to that.
What does this all mean?
It means that you should be out of all your losing long positions and either be in cash or in short positions. (See previous blogs for shorting ideas.)
Another MANDA Addition
I don't know how I missed this one, but SM&A (WINS) is a management services company that provides business capture and proposal development services along with post-award risk management and profit maximizing to the homeland security, aerospace, information technology, and engineering industries.
On October 31st, the company announced a proposed merger agreement with Odyssey Investment Partners, a privately held middle market private equity firm. Terms of the all-cash deal is $119M which translates into $6.25 per SM&A share.
According to the company press release, management is delighted at the offer which is subject to the usual anti-trust regulatory issues and shareholder approval. It also may solicit other takeover offers during the first 45 days. The deal is being financed by Caltius Mezzanine and this is the only thing that really bothers me about this deal. Caltius finances deals in the $5-$75M range so I'm wondering where the extra dough is coming from...?
BUT...the stock has held up pretty well considering the market climate and I don't think that Odyssey would be dumb enough to make such an offer if it knew it couldn't raise the cash. The deal is expected to close late this year or early next year.
The stock is going into the MANDA portfolio today at a price of $5.61. This gives a yield of around 11.4% on the trade.
Disclosure: I'm going to purchase the stock in my own portfolio if it trades at or below $5.55.
Well, it looks like the VIX is continuing its uphill march closing over 80 today, up almost 9%. As the VIX shoots up, so plummets the market. Major market averages closed down 5-7%. The only intelligent thing I can say from looking at their charts is that from a bullish standpoint they all completely suck...and it appears that they are going continue to suck. ("Suck" is the financial technical term for really really really awful.)
So, what are the next support levels?
Unfortunately, pretty far away. In fact, I can't even give you a number on the Dow Industrials and the OEX (S&P 100) because they've both surpassed their ten year support levels and I don't have data going back any further. The good news is that I can give you support levels for the other indices:
S&P 500 ($752): Minor support is at 670. The next major support level is at—no, you don't want to know. (Okay, it's at 470.)
Nasdaq ($1316): The Nazzie is right on major support. Next stop is 1175, but I do think we could see it brush 1000. Remember Nasdaq 5000?
Dow Transports ($299): Minor support levels are 285, 250, and 215-220. Next major support is 200. Let's hope it doesn't come to that.
What does this all mean?
It means that you should be out of all your losing long positions and either be in cash or in short positions. (See previous blogs for shorting ideas.)
Another MANDA Addition
I don't know how I missed this one, but SM&A (WINS) is a management services company that provides business capture and proposal development services along with post-award risk management and profit maximizing to the homeland security, aerospace, information technology, and engineering industries.
On October 31st, the company announced a proposed merger agreement with Odyssey Investment Partners, a privately held middle market private equity firm. Terms of the all-cash deal is $119M which translates into $6.25 per SM&A share.
According to the company press release, management is delighted at the offer which is subject to the usual anti-trust regulatory issues and shareholder approval. It also may solicit other takeover offers during the first 45 days. The deal is being financed by Caltius Mezzanine and this is the only thing that really bothers me about this deal. Caltius finances deals in the $5-$75M range so I'm wondering where the extra dough is coming from...?
BUT...the stock has held up pretty well considering the market climate and I don't think that Odyssey would be dumb enough to make such an offer if it knew it couldn't raise the cash. The deal is expected to close late this year or early next year.
The stock is going into the MANDA portfolio today at a price of $5.61. This gives a yield of around 11.4% on the trade.
Disclosure: I'm going to purchase the stock in my own portfolio if it trades at or below $5.55.
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