Full review of SSI performance during 2017.
It was a very interesting year for Special Situation Investments. In total there have been 38 investment ideas posted during the year and members added a further 12 in the new ‘Member Idea’ section. By luck or skill the performance has been great – only two trades ended in losses and the rest averaged 15% returns. Scope continued to widen and only 10 out of 38 investment opportunities were odd-lots.
In calculating average performance I excluded all odd-lot type situation as returns on these are limited on absolute basis. Out of the remaining 28:
– The outcome on two (ESSX and NEWS) is still pending;
– Two trades did not work out well – QIWI (- 25%) and UTG (-0.1%);
– The remaining 24 generated 15% return on average. Taking into account loosing trades the average return stands at 13%.
– There were also two cases posted in 2016 that were closed at large losses during 2017 – NYRT (-28%) and RAD (-30%).
2017 Best Performing Trades
Destination Maternity (DEST) investment following sell-off after failed M&A (+90%)
PennTex Midstream (PTXP) in expectation of acquisition by parent (+32%)
Tangoe (TNGO) wide spread despite number of acquisition offers (+25%)
Advanced Emissions Solutions (ADES) investment in expectation of dividend initiation (+23%)
Tejoori (TJI.LON) liquidation case with +30% return already achieved and further 20% pending
Odd-lots Fade Out
Number of odd-lot opportunities in the market continues to decline and most of the remaining ones are immaterial ($20-$50 returns only). However, in some cases market volatility opens possibilities to initiate positions significantly below the lower tender limits as was evidenced by CNTE. There was only one split-off transaction during the year with an odd-lot provision (CBS +$470). The other larger odd-lot tender was WTM which resulted in $1200 return, but seemed too risky to be worth participating.
In mid November of the last year I have launched ‘Member Ideas’ section and so far 12 special situation cases have been posted there. I look forward to receiving further investment ideas from the members and hope that this section will continue to expand.