SOLD NXP SEMI, VALSPAR
NXP SEMI: One regret that I had was that I didn't manage to accumulate a large position in NXP Semiconductor (NXPI). As readers may recall, NXP Semiconductor is being bought over by Qualcomm for $110 in cash per share. The merger is not anticipated to be completed before Q3 but the price of NXPI has already been bidded up by a combination of good results and the possibility that Qualcomm will need to increase the merger price to satisfy investors. On 31st May, rumors broke out that Elliot Management and other large investors are demanding that Qualcomm up the merger price or they will not support the tender. Although there is a possibility that Qualcomm may increase the merger price in the future to satisfy investors, I took a conservative stance and sold all my shares at $109.10, logging in about 48% returns on an annual basis.
VALSPAR: Another position that I had disposed was Valspar at $112.99 as its merger with Sherwin-Williams nears completion with the added bonus of a final dividend payment on 31st May. This merger play is the sort of short term high probability play that I would like to have for about 30% of my portfolio as I wait for opportunities in longer term merger plays.
BOUGHT NEUSTAR, Fidelity & Guaranty Life, Fortress Investment, WGL Holdings, Moneygram
NEUSTAR: Neustar is initiated as a short term high probability play. The buyer is Golden Gate Capital. Outstanding regulatory include CFIUS review which I think should not be problematic. My estimate for the approval and hence deal completion should be end of June to July 2017. At about 1% discount to deal price, this is not a bad deal to play.
Fortress Investment: Fortress investment is being bought over by Softbank. Again this is another merger that needs CFIUS approval but I see no issues with it. Financial mergers can take a bit more time to be completed, as seen by the merger of Janus Capital and the U.K.'s Henderson Group which took almost 8 months to be done. The Fortress merger should take a shorter time and now almost 4 months had passed and the merger should be done in 3 months time, making this merger a short/mid term investment. The deal spread about 1% which is not alot but it also reflect the certainty that the deal will be completed duely.
Fidelity & Guaranty Life: When I invested in this merger, the spread was about 1.5% but now it has narrowed till 0.5% so there is not much to make in this merger play today.
WGL Holdings: My first utility merger play and there is some amount of uncertainty whether the states will approve this transaction since alot of debt will be piled up onto the merger entity. May sell before merger completes as the merger spread narrows.
Moneygram: Alibaba's Ant Financial is buying Moneygram to gain more worldwide access to financial services. This may attract some CFIUS scrutiny but I believe utimately the merger will prevail.
All the new investments above are initiated as minor positions which means less than 5% of funds invested.
ADDED MONSANTO, MOBILEYE, BROCADE
Added more to long term positions monsanto and mobileye as well as short term merger brocade.
Added minor positions of Abercrombie & Fitch at about $13. I like the odds at $13 or lower and may liqudate if it reaches $14 and above.
My first trade of June ended within one day with a loss. Pinnacle Foods was the target of Conagra and I liked the prospects and syngergies that can be generated by the merger, making this a high probability pre-merger play but within the next day, news came that the talks had ended due to valuation and i promptly sold 75% of my positions on the same day. I will get rid of the rest as the price recovers slightly. With pre-mergers its usually hits and misses.