Home Value Investing Mid Yr 2023 Portfolio Assessment

Mid Yr 2023 Portfolio Assessment

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Mid Yr 2023 Portfolio Assessment

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This can be extra of a quick check-in relatively than a full evaluation.  Sadly, my current spell of underperformance has continued into the primary half of 2023, my portfolio is up marginally, 6.75% versus 16.89% for the S&P 500.  I am nonetheless above my long run objective of 20+% IRR; the present goes on.

The principle efficiency detractors had been outsized positions in MBIA (MBI) and Transcontinental Realty Traders (TCI), two speculative M&A candidates which have didn’t materialize.  Lots of my different speculative M&A concepts did announce offers, however effectively under the place I had penciled them out.  In consequence, I’ve leaned extra on smaller place sizes within the damaged biotech basket and different flavors of particular conditions for brand spanking new concepts lately.

The one outsized performer was Inexperienced Brick Companions (GRBK), homebuilders have exceeded low expectations as single household house stock has remained tight regardless of rising rates of interest.  I’ve begun to promote down my place, it had change into too massive and would not actually match into a worth or particular state of affairs bucket any longer.

Closed Positions

  • Radius World Infrastructure (RADI), INDUS Realty Belief (INDT) and Argo Group Worldwide (ARGO) all acquired bids that had been a bit disappointing from elevated early 2022 expectations when rumors surfaced that every had been on the market.  All had been rate of interest delicate companies the place the worth declined as charges rose quicker than initially anticipated.
  • Within the damaged biotech basket: 1) bought Talaris Therapetuics (TALS) after their current reverse merger with Tourmaline Bio for a pleasant acquire; 2) bought Oramed Prescribed drugs (ORMP) for minimal acquire after just a few readers identified their promotional (perhaps being form) administration after which noticed it first hand; 3) Bought Carisma Therapeutics (CARM, fka Sesen Bio) after the reverse merger, was left with a stub place (acquired the non-tradable Sesen CVR) that I bought pretty indiscriminately for a small loss.
  • The Franchise Group (FRG) story ended relatively disappointingly, have a little bit of a bitter style in my mouth, after rumors surfaced early within the 12 months that CEO Brian Kahn was contemplating taking the corporate non-public.  FRG then went on to have a horrible Q1 the place they breached a covenant of their credit score facility, stopping them from persevering with their dividend, that was disclosed concurrently the corporate agreed to Kahn’s $30/share buyout.  Because the firm is form of a one-of-one based mostly on Brian Kahn’s deal making, with a covenant breach, it was unsurprising that no different bidder got here ahead throughout the go-shop interval.
  • I bought Star Holdings (STHO) shortly after the shut of iStar/Safehold transaction after just a few readers reached out with some issues on SAFE.  I will re-evaluate down the street, that is one I will seemingly rebuy once more in some unspecified time in the future in its liquidation journey.
  • My thesis in Liberty Broadband Corp (LBRDK) was stale, I initially purchased Common Communications as a merger arb and held by means of GCI Liberty into Liberty Broadband.  Bought it extra due to the chance value, reinvested these proceeds into extra present concepts.
  • Digital Media Options (DMS) ended up rejecting administration’s buyout provide and as a substitute took on debt to make an acquisition, now it is buying and selling under a greenback.  I need to consider the existence of all these busted SPACs will ultimately flip into extra particular state of affairs sort alternatives, however these are questionable administration groups and it’d take a short while longer for administration and boards to completely come to their senses.
  • Sonida Senior Residing (SNDA) disclosed a going concern warning, I discussed some place else that I outsized this place given the mix of working leverage and monetary leverage, ought to have handled this extra as an possibility than a core place.  Shares have recovered a bit, however they nonetheless face a difficult labor atmosphere and a scarcity of scale.

Present Portfolio

I do even have an assortment of non-traded securities (CVRs, liquidating trusts and a bond with out a market) that I’ve omitted above.  Thanks for persevering with to learn and comply with alongside, additionally thanks to all which have despatched me concepts.  Everybody please have a protected vacation.

Disclosure: Desk above is my taxable account/weblog portfolio, I do not handle exterior cash and that is solely a portion of my general property.  In consequence, the usage of margin debt, choices or focus doesn’t totally signify my threat tolerance.

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