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Closing out PPCO with a 26% gain in less than a week. I'm beginning to see the value in following in the footsteps of activist investors.



August 10, 2010 – Comments (3) | RELATED TICKERS: PPCO.DL


Lately I have been experimenting with going long stocks in CAPS that activist shareholders, who have a successful track record of course, have been accumulating substantial positions in. Today this strategy paid its first dividend. 

Less than a week ago I picked up shares of Penwest Pharmaceuticals (PPCO) when I heard that the activist shareholders were zoning in on the company.  Here's what I had to say in my stock pitch:

Kevin Tang and Roderick Wong were just elected to Penwest's Board of Directors. They have a solid track record of taking successful activist positions in Pharmaceutical companies.  They will likely attempt to force Penwest to wind down all of its operations other than its Opana royalty stream.

Short but sweet.  Apparently Mr. Tang and friends were in a hurry because today the Penwest announced that it is being acquired by Endo Pharmaceuticals (ENDP) for $5/share.  According to CAPS, that represents a sweet 26.02% premium to the $3.96/share that I picked up my position in the company at six short days ago.

I will likely close out this position once the CAPS seven day minimum holding period has been reached.

Not all activist shareholder situations will work out this nicely, but I am beginning to see the benefit of following specific activists who have successful track records...particularly ones who target smaller companies.  There seems to me a large number of special situations like this in the pharma and biotech sectors.


3 Comments – Post Your Own

#1) On August 10, 2010 at 5:17 PM, Valyooo (38.19) wrote:

What source do you use to track their activity?

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#2) On August 10, 2010 at 8:01 PM, TMFDeej (97.71) wrote:

Hey Valyoo.  I usually just read a ton.  If one does enough reading, they eventually compile a list of interesting activist investing situations.  Barron's also has a column every week that highlights some.

Once I have found a set of activist investors that I have been successful with, I'll remember them and keep my eyes peeled for their recent activity.


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#3) On August 10, 2010 at 8:16 PM, Valyooo (38.19) wrote:

Gotcha, cool, thanks!

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