I exited my position in Conrad a week ago and I sold my position in AIG today. I bought both stocks in 2012, and they were both big winners (although I could have done a lot better if I sold Conrad earlier). Including dividends Conrad returned 114.7% while I made 92.6% on AIG. At this point in time, they were both low conviction ideas, and I needed to make some room. My portfolio is currently 102.7% long and 5.0% short for a net long exposure of 97.8%, so I’m still almost fully invested. Luckily a couple special situations will also be concluded this month.
Northern Offshore reported that the merger with Shandong Offshore was completed earlier this week and that the cash payment will be made on August 12. MCGC has scheduled their shareholder meeting for August 14, and if enough shareholders vote in favor for the merger it should and could be completed shortly thereafter. There is a risk that the company will not be able to gather enough votes because a lot of shareholders are retail investors who might not take the trouble to cast a vote. I don’t think people will vote against the merger because they are unhappy that the deal with HC2 didn’t go through since that deal is now totally dead after HC2’s stock price dropped ~40%.
Author is long NOF.OL, MCGC, no position in AIG and CNRD anymore
Why exit AIG at this stage? It is still trading at a tangible discount to tangible book value, is on an inexorable journey towards earning it’s cost of capital, and is returning large amounts of cash to shareholders? There is surely still upside available and minimal risk of loss over medium term?
I bought AIG mainly because I thought that the US government as a “forced” seller would sell it too cheap, not because I have a lot of faith in a turnaround story. Perhaps they will be able to earn a decent ROE in the future, but since they haven’t been able to do so for years I think that’s easier said than done. So my plan was always to hold this for roughly three years and sell.
I also exited the AIG-WT warrants couple of weeks ago from similar reasons.
Are you considering holding cash on the side and not be fully invested?
No, I see more attractive idea’s than I have money…
The MCGC share price decline leaves me puzzled. I noticed the decline in PFLT shares but this should actually be good as the exchange ratio is not set yet and MCGC gets a higher share in the combined company. What am I missing?
Exchange ratio will be based on PFLT’s NAV, not the lower share price.