Performance – December 2022

SSI tracking portfolio is up by 5.2% in December and up 13.6% for the whole of 2022. A detailed performance breakdown is provided below.

During the month we published 1 new Portfolio idea and highlighted 12 Quick Pitches in our weekly reports. 3 Portfolio ideas were closed with gains ranging from 15% to 30%.

Below you will find a more detailed breakdown of tracking portfolio returns by individual names as well as elaborations on names exited during the month.



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. See full disclaimer here.

The chart below depicts returns of SSI Tracking Portfolio since the start of 2017 – these are not actual trading results but rather an aggregate performance of Portfolio investment ideas published on SSI.

2022 Dec performance chart 1



The graph below details the individual MoM performance of all SSI Portfolio ideas that were active during the month of December 2022.

DEC splits final



111, Inc (YI) – Management Privatization +30% in 3 Months
One of the most intriguing US-listed Chinese privatizations that I’ve witnessed so far. Back in September founders/management of a Chinese pharmaceutical distributor announced intentions to buy out minority shareholders at $3.66/share. The buyers had 92% of the voting power and 44% economic interest. Multiple arguments suggested the transaction is likely to close successfully, yet the shares were trading at a 30% spread to the offer price. The situation was likely getting mispriced due to the general negative sentiment towards Chinese stocks, even though YI had no resemblance to the usual shady Chinese ADRs. There was plenty of liquidity to take advantage of this arbitrage opportunity with an average daily trading volume of $500k+. In the middle of December, without any news on the privatization YI‘s stock skyrocketed above the offer price. Not entirely sure what drove the share price upwards, but the move coincided with China lifting COVID restrictions as well as YI starting to sell Pfizer’s Paxlovif for COVID treatment. I have timely exited at around the offer price levels marking a +30% gain in 3 months. The share price has since retraced close the initial write-up levels, so the privatization thesis is starting to look interesting again.

Metacrine (MTCR) – Merger Arbitrage +21% in 3 Months
A merger in biotech pharma sector that traded at a very wide 22% spread. The buyer EQ was mostly interested in MTCR’s net cash – the main development program had been canceled a while ago while the rest of the acquired pipeline was to be terminated. The initial stock-for-stock offer came at a premium to cash on MTCR’s balance sheet. However, due to the subsequent decline in the EQ share price, the merger consideration eventually dropped to a 40% discount to MTCR’s net cash. At that point, an activist shareholder purchased 15% of MTCR and demanded a higher offer arguing that liquidation of MTCR would result in a better outcome for the company’s shareholders. With the market expecting an improved offer or switch to liquidation, the spread promptly closed delivering 21% gain in 3 months for this arbitrage. Subsequently, the merger was terminated and full liquidation now seems to be the most likely option – the case might be worth revisiting.

ThinkSmart (TSL.L) – Merger Arbitrage +15% in 5 Months
ThinkSmart agreed to be acquired by its chair/CEO/founder Ned Montarello (owned 29%). The risks of the transaction falling apart were always minimal. The buyer was getting a fairly good deal by retaining the operating business plus some cash virtually for free. Minority shareholders were equally happy – TSL had been trading at a wide discount to its stake in SQ and the offer of full proceeds from the sale of SQ stake seemed like a fair one. Exposure to SQ volatility was easy to hedge with plentiful and cheap borrow. The double-digit spread existed mainly due to low TSL trading liquidity and the cross-border nature of the arbitrage – always love these kinds of setups.


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