A Missed Opportunity + MANDA Updates

Wah! I decided to catch up on some paperwork this morning instead of my usual routine of chart surfing and consequently missed a great one day play in MANDA, my mergers and acquistions fund. I changed my routine for two good reasons: the credit chill has put the kibosh on M&A activity and I said that I wouldn’t be making any new M&A purchases until the credit market thaws.

However, rules are made to be broken and I missed a golden opportunity this morning when, out of the blue, Apria Healthcare (AHG) announced that its proposed merger with the Blackstone Group (BX) would close later today. The deal was originally announced months ago and since then the stock has steadily fallen from $20 to $14 on fears that the deal might die. In this environment, who wouldn’t be afraid? Anyway, the stock opened up this morning at $20.25, sank to a low of $19.66 two hours later, and has just closed the day as well as its life as an independent company at the buyout price of $21. This was a done deal and would have returned a nifty 3.7% if I had bought on the open; had I been outrageously lucky and bought at the morning low, my return would have been 6.8%–not too shabby for a one day payout! But I missed it, and now I’m crying in my coffee. WAH!

The takeaway lesson here is to expect the unexpected, no matter what the market climate is.

MANDA Updates
Since the last update several weeks ago on October 3rd, Lincoln Bancorp (LNCB) posted a fourteen cent dividend in line with its past four years of quarterly dividends. Rohm & Haas (ROH) announced it will be paying its fourth quarter dividend in line with the previous two quarters. In my last update I said that I would set a stop/loss on Rohm & Haas if it fell below $60. Well, it did and the reason I didn’t pull the trigger was that the move occurred on October 10th, the day the market fell to its lowest intraday level in years. I vowed that if the stock closed the day under $60, I would sell it but a huge end-of-day rally kept it off the chopping block. Whew! Glad I waited on that one!

I wish I could say the same for Bluegreen (BXG). In hindsight I am glad that I finally dumped it when I did as it’s dropped another 30%. However, had I gotten out when I said I would when it closed under its $9 support level on September 15th, the MANDA portfolio would only be down less than 4% instead of nearly 13%. This just shows you how one bad loss can wreak havoc on an otherwise solid portfolio and why setting stop losses is so important. [I hope I’m listening to this.]

Tomorrow I’ll have some results on the buy and hold strategy. So far, the results are quite interesting.

[Click on images to see a larger view.]

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