Performance – February 2021


During February 2021 we’ve posted 11 new ideas and closed 7 cases (all profitably).

Our tracking portfolio returned 8% during the month.

See below for a detailed breakdown of tracking portfolio returns as well as descriptions of all closed cases.

28 active ideas are currently available on SSI.


Tracking Portfolio – Feb’21 Returned +8%

february portfolio 3

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 – Feb’21 

February 2021 returns (+8% in total) were mostly driven by the strong performance of GROW and PLMR positions.

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

feb21 attribution



Liberty Health Sciences (LHSIF) +15% In 1.5 Months
Liberty Health Sciences, a vertically integrated medical cannabis retailer, was/is due to be acquired by its peer Ayr Strategies. Consideration stood at 0.03683 Ayr shares per each LHS share indicating an arbitrage spread of 15%. The key condition – Liberty’s shareholder consent – was expected to pass due to 29% of shareholders already supporting the merger. A small group of shareholders (<5% of shares) voiced the opposition, however, it seemed unlikely to derail the merger, but increased the chance of Ayr raising the offer. The transaction was a purely strategic land grab deal and the buyer seemed very enthusiastic and incentivized to proceed – the risk of termination was low. Recently, shareholders have given their consent and the spread has dried out quickly. The idea generated 15% in 1.5 months.

Ambase Corporation (ABCP) +60% In 3 Years
As Dave has published a full new write-up reflecting all recent developments we have closed the initial ABCP idea with 60% return in 3 years. Litigation is ongoing and an upside/base scenario still has multi-bagger potential.

DuPont de Nemours (DD) +17% or $1300 In A Month
This was a standard split-off transaction. DuPont de Nemours (DD) was selling its Nutrition & Biosciences (N&B) business to International Flavours & Fragrances (IFF). As part of the transaction, N&B had to be split-off and merged into a subsidiary of IFF. DD shareholders had the option to participate in the tender and exchange their DD shares for IFF shares. Every $100 of DuPont stock accepted in the tender was be converted into $107.53 of International Flavours & Fragrances (IFF) stock subject to the upper limit of 0.7180 shares of IFF per DD share. Odd lot priority was included. Borrow for hedging was unavailable on IB. As with every previous split-off deal before, this transaction closed successfully. Unhedged positions (as hedging was not an option due to lack of borrow) resulted in a +17% gain (for odd lots) in 1 month.

Asaleo Care (AHY.AX) +10% In 2 Months
Australian tissue and personal care products manufacturer Asaleo Care received a non-binding proposal from its largest shareholder Essity at A$1.26/share in cash. Shares were trading at a premium to this price reflecting market expectation of an increased bid. The buyer seemed highly credible, well-funded and already held a 36.2% stake in AHY. Moreover, AHY and Essity had a long-lasting business relationship. The strategic rationale was solid and the acquisition timing seemed opportunistic. Asaleo’s operational performance has improved in FY2020 – the company outperformed its guidance and indicated further recovery of the business and provided substantial growth forecasts in the upcoming years. Due to the improved outlook, AHY management rejected Essity’s proposal claiming that it was undervaluing the company, however, the discussions continued. This development further increased our confidence that the increased bid is likely. As expected, Essity upped the offer by 15% and we closed the idea with 10% gain in 2 months.



Quick ideas are not included in the tracking portfolio.

China XD Plastics (CXDC) +13% In 2 Months
Modified plastics manufacturer China XD Plastics was due to be taken private by its founder/chair/CEO at $1.20/share. All required approvals were received and the market believed that closing was imminent. However, the closing got delayed by almost two months until mid-Feb’21, and the spread widened from the previous 1% to 20%, which is when we posted the idea. There were multiple signs suggesting that the transaction should complete as expected, while the downside looked limited. Eventually, due to unexplained volatility, the spread tightened (with short-term spikes to above the offer) and we used this opportunity to close the idea. The transaction is still pending (after yet another extension, until May’21) and the idea might be worth revisiting if the spread widens again.

Wanda Sports Group (WSG) +13% In 3 Months
Wanda Sports Group received a non-binding privatization proposal from its parent Wanda Sports & Media at $2.50/share. Parent controlled 72% of economic interest and 91% of voting power. The acquisition seemed highly opportunistic and the downside quite limited. The main uncertainty was the management’s incompetence and the risk of them screwing shareholders in one way or another. Interestingly, the non-binding proposal was eventually changed to a tender offer at a slightly better price ($2.55/share) and with no minimum acceptance conditions. The tender has closed a month later, participating shareholders were cashed out and WSG shares were delisted.

Zagg (ZAGG) +1% In One Month (7% Still Pending)
Mobile accessories manufacturer Zagg was subject to an acquisition by a consortium led by Evercel (small investment shop). Consideration stood at $4.20/share + CVR of $0.25/share. CVR was conditioned on Zagg’s PPP loan forgiveness by Dec’22. The buyer seemed credible and competent with little chance of walking away from this opportunistic acquisition at a bargain price. Given the silence from two ZAGG’s activist investors, it seemed likely that shareholders would approve the transaction. The merger closed as expected and the initial investment has now been returned with 1% gain. Investors received the CVR for free and might expect $0.25/share of distributions by the end of 2022.


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