Performance – November 2020


This month we’ve posted 12 new special situation ideas on SSI. 7 cases were closed, with 6 of them – profitably. Undoubtedly, the clear winner of the month is Ashford Hospitality Trust (AHT-PG), which in 1 month generated 80% return for hedged positions and over 200% return for unhedged positions.

29 active cases are currently available on SSI.

Teaser idea: Currently we have an interesting asset management company, which saw its AUM and management fees shooting straight up due to COVID. AUM continues to grow and has surpassed any kind of forecasts as of right now. Stock is expected to re-rate with the next quarterly results. The company is cheap and could easily double from the current levels.


Tracking Portfolio – Nov’20 Return +11%

nov20 performance

Disclaimer: These are not actual trading results. Tracking Portfolio is only an information tool to indicate the aggregate performance of special situation investments published on this website. Quick Ideas are not part of the tracking portfolio. See full disclaimer here.


Individual Performance Split – Nov’20

The graph below details the individual MoM performance of all the active/closed cases (excluding Quick Ideas) during November.

nov20 att


Ideas Closed During November 2020

Ashford Hospitality Trust (AHT-PG) +80% In 1 Month
Ashford Hospitality Trust (REIT with 116 hotels) launched a tender offer to exchange all of its preferred shares into common shares at 5.58 ratio diluting existing common holders by 90%+. AHT was severely hit by the COVID-19, which resulted in substantial cash burn and a tight liquidity situation. The company claimed that they need this exchange in order to get rid of the preferred stock burden and ease their access to capital markets. Management seemed very incentivized and in the process has waived pretty much all of the outstanding conditions that were obstructing the transaction. A couple of weeks before the expiration deadline, positive vaccine news have boosted the whole hospitality sector (including AHT), which caused a short squeeze and the spread widened even more for the unhedged positions. Eventually, all tendered shares were accepted for exchange resulting in 200% return for the unhedged positions and 80% return for hedged positions.

BBX Capital (BBXIA) +16% In 2 Months
BBX Capital was a fresh spin-off that traded at 76% discount to SoTP and involved several favorable spin-off dynamics. The majority of SoTP value lied in cash and real estate development projects, which saw minimal impact from the pandemic. The large discount was mainly due to controlling ownership of Levan’s family and affiliates, which have a long and flashy track record of shareholder value destruction and self-interested management style. However, a part of the discount was likely caused by the initial sell-off as BBXIA was spun-off as OTC stock, while the parent traded on NYSE. Eventually, pressure from the spin-off driven sell-off subsided and the discount has narrowed slightly. However, it became clear that the market’s distrust of the controlling family is greater than it seemed initially. Given further uncertainty regarding the appropriate discount size and risk of Levan’s family involvement, we have closed the idea with a 16% profit in 2 months.

Atlas Technical Consultants (ATCXW) +14% in 1 Month
Atlas Technical Consultants intended to eliminate all of its outstanding warrants and announced an offer to exchange them into 0.185 class A shares. Borrow was unavailable, so only the unhedged trades were possible. 53% of warrant holders already supported the transaction. The offer was likely to close as the company needed to simplify its capital structure in order to get better access to capital markets. The biggest risk was the lack of hedge as the exchange was supposed to double the count of Class A shares. The exchange closed as expected delivering 14% return in 1 month.


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