Mid 12 months 2025 Portfolio Evaluate

I joke that any massive recurring convention name is incomplete with out the host commenting on how shortly the yr is progressing, however right here had been are, already midway by 2025.  My efficiency struggles proceed as my portfolio misplaced -3.64% within the first half of the yr, versus the S&P 500 gaining 6.20%.  My long run efficiency (hopefully solely briefly) dipped beneath my purpose of a 20% CAGR, the brink the place I believe the hassle is price my time.

My largest contributors to date have been Par Pacific Holdings (PARR), Third Harmonic Bio (THRD) and ACRES Industrial Realty (ACR); with the most important distractors being Artistic Media & Group Belief (CMCT), Mereo BioPharma Group (MREO) and 23andMe Holdings (ME).

Beneath are some fast elevator pitch summaries on my present positions.  As typical, a few of these had been written as much as every week in the past and could possibly be barely stale. 

Present Positions:

• Damaged Biotechs
• Athira Pharma (ATHA) has a market capitalization of ~$12.1MM regardless of having $33.7MM in NCAV as of three/31.  This busted biotech introduced a strategic evaluate again in September, hiring Cantor Fitzgerald, however did not fully halt their analysis pipeline.  ATHA has one potential ALS remedy (ATH-1105) presently in a Section 1 trial with wholesome adults, the corporate is hoping to dose with precise ALS sufferers later this yr.  If we assume they’re going to burn one other $15MM (presently spending ~$9MM/quarter) chasing the drug improvement ghost and on any strategic transaction bills, liquidation worth is available in round $0.48/share versus a present quote of $0.31/share.  That is earlier than ascribing something for the general public itemizing or IP worth with ATH-1105.  Perspective Advisors is the most important shareholder with ~14% of the shares excellent, they beforehand indicated in a 13D submitting they’ve been in discussions with administration on a reverse merger or different transaction.  BML owns 8% and has been extra lively in pushing for liquidations lately.  This case is not as clear as I sometimes like and has a big ongoing burn, however I proceed to carry a small place.
• CARGO Therapeutics (CRGX) totally waived the white flag on 3/18, did a 90% discount in drive, suspended all drug improvement and appointed a brand new CEO to run the strategic options course of.  The inventory responded and closed a lot of the hole to my estimate of liquidation worth, which remains to be a bit underneath $5/share ($235MM, massive sufficient sum that it needs to be engaging to potential merger companions), it trades for $4.14/share at this time, representing a good quantity of upside nonetheless remaining.  Madison Avenue Companions and Kevin Tang every personal about 6.5%.
• ESSA Pharma (EPIX) is buying and selling for $1.75/share and my estimate of its liquidation worth is roughly $2.10/share.  9.5% shareholder BML and 5.1% shareholder Soleus Capital Administration have each written public letters to the board pushing for a liquidation.  Kevin Tang can also be right here with a 9.7% stake, however BVF Companions is the most important shareholder at 20%.  Within the Q1 outcomes (filed after the Soleus & BML letters), EPIX included the road “we now have taken productive steps in direction of a choice and hope to share an replace within the close to future.”  That was 53 days in the past, hopefully a decision will happen shortly.
• HilleVax (HLVX) is the oldest within the basket, having stopped improvement efforts final July and later introduced their strategic options course of in August.  My estimation of liquidation worth is roughly $2.50/share (HLVX nonetheless has their working lease to scrub up, I am valuing it at a 50% haircut to the total face quantity) in comparison with a present quote of $1.90/share.  The shareholder registry right here is a bit more conventional biotech centric with Frazier Life Sciences proudly owning 21%, Takeda proudly owning 13.5%, however Kevin Tang is lurking with just below 10%.  There’s extra establishment danger right here in comparison with others, HLVX has stored the road of their press releases and filings that one potential end result of the evaluate is to pursue continued improvement of their vaccines in adults (they initially focused infants within the failed trial).
• In late December, Ikena Oncology (IKNA) entered right into a reverse-merger settlement with InmageneBio (IMA) whose lead asset IMG-007 has an ongoing Section 2b scientific trial for the therapy of atopic dermatitis (continual itchy / infected pores and skin).  The market does not like this deal regardless of the $75MM concurrent PIPE, IKNA is focusing on $100MM web money at shut or ~$2.05/share versus a present quote of $1.35.  I lately voted towards the merger, however nonetheless count on the deal to undergo as 25.8% of IKNA shareholders have signed on to a help settlement (though BML, 8.4% shareholder, has popped up saying they’re voting towards the deal).  Even in these disappointing offers, sometimes there’s a little bit pop after shut because the shareholder base turns over.
• No main information at Mural Oncology (MURA), improvement has been totally halted and the corporate is pursuing strategic options.  My estimation of liquidation worth is $3.25/share towards a present quote of $2.50/share.  There’s some good dialogue within the feedback concerning the two-year protected harbor for spins (would falloff this November) and Irish takeover guidelines pushing this in direction of being acquired or a reverse merger versus a liquidation.
• Repare Therapeutics (RPTX) is a busted biotech with a liquidation worth of no less than $2/share (presumably extra, could possibly be some IP worth), however nothing actually notable has modified since my write-up final month.  One slight constructive, they did embrace a brand new line of their 10-Q making the strategic evaluate extra clear, from the MD&A bit: “We plan to discover a full vary of strategic options and partnerships throughout our portfolio to maximise shareholder worth.”
• In April, solely two quick months after asserting strategic options, Third Harmonic Bio (THRD) introduced it could be liquidating and returning money to shareholders.  The liquidation was accredited virtually unanimously (different equally located biotechs ought to take word), the preliminary distribution is scheduled to happen within the third quarter with an estimated whole of $5.30-$5.44/share (the preliminary distribution will possible be 90-95% of this worth).  This does not embrace any proceeds from the sale of THB335 (this is what seems to be the asset sale deck).  Together with AVTE or ABIO, a mannequin for different damaged biotechs to observe.
• M&A / Strategic Alternate options Processes
• CKX Lands (CKX) is a microcap Louisiana land financial institution that began a strategic options course of virtually two years in the past (August 2023), admittedly the success fee for lengthy drawn out processes shouldn’t be good.  The most recent replace appeared within the 2024 10-Ok: “As a part of administration’s want to maximise worth for shareholders by this course of, the Firm expects to hunt to partition, in type or by sale, possession of its undivided pursuits in lands co-owned with others. There will be no assurance that the Firm shall be profitable in reaching a negotiated partition of its co-owned acreage that may keep away from the necessity to search partition in courtroom.”  About half of their web acreage is held by a 16.67% possession in three way partnership, it sounds just like the main bidder does not need to be a part of the JV (comprehensible!) and needs the acreage partitioned/subdivided which might take considerably extra time or not occur in any respect.  There’s not a lot else to go on right here, truthful worth remains to be possible meaningfully above the present $10-$11 share worth, however any failure to promote the corporate means CKX is probably going in forgotten microcap purgatory for an additional decade.
• HomeStreet (HMST) is a west-coast regional lender that was caught up within the 2023 banking disaster, initially they offered themselves to FirstSun Capital Bancorp (FSUN) in January 2024, however that deal confronted regulatory scrutiny over the mixed entities CRE publicity and the deal was terminated in November 2024.  HMST then went about one other sale course of, resulting in an all-stock take care of California primarily based Mechanics Financial institution (MCHB) which successfully is a reverse merger, MCHB is non-public with restricted liquidity on the OTC market, their shareholders will personal 91.7% of the mixed firm.  The controlling shareholder of MCHB is the Ford Monetary Fund, their principals are robust operators having run this playbook a couple of instances the place they chip away on the effectivity ratio and in the end promote their financial institution holding firm investments to bigger establishments.  Within the meantime, they plan to pay 90+% of web earnings as a dividend which ought to make MCHB eligible for inclusion in some dividend ETFs and appeal to different earnings centered traders.  The transaction is scheduled to shut September 1st, Mechanics Financial institution is guiding to $1.31/share in 2026 EPS, which might equate to a 10x earnings a number of on a ahead foundation at at this time’s $13 HMST share worth.
• Earnings Alternative Realty Buyers (IOR) days in public markets needs to be numbered.  The corporate is extremely easy, nearly all of the belongings are in a cash-like receivable from the exterior supervisor, with the rest in a word to an inexpensive housing improvement.  In January, the controlling household through Transcontinental Realty Buyers (TCI) accomplished a young provide the place they had been solely shake out 21,128 shares of IOR at $18/share (versus a ebook worth of $30.22/share) (in case you learn by the a number of tender provide amendments, it seems some shareholders backed out of the tender) to carry their possession above the 90% degree (permitting them to carry out a squeeze out in Nevada).  Because the shut of the tender, TCI has continued to purchase shares within the open market including one other 33,524 shares, all beneath the $18/share tender provide.  Just lately, shares have drifted nearer to $19, quickly the controlling household is probably going going to find out they’ve run out of disinterested sellers (little or no public float is remaining) to buy shares from and do a squeeze out.  Hopefully at a extra equitable worth.
• NSTS Bancorp (NSTS) is a small transformed thrift positioned on the outskirts of Chicago’s northern suburbs.  NSTS handed its three yr cooling off interval in January and might now be acquired, shareholders are pushing the financial institution to promote itself and administration does not look like standing in the best way.  Tangible ebook worth of ~$15/share looks like a pleasant ground on any takeout, NSTS presently trades for $12.25/share.
• Soho Home & Co (SHCO) is an operator of personal social golf equipment, late final yr, the corporate introduced it had obtained a $9/share money provide from a consortium that features Govt Chairman Ron Burkle.  In late January, Dan Loeb’s Third Level (9.9% proprietor) despatched a letter to the Soho Home board pushing for a greater deal.  Since then, the corporate has been mysteriously quiet, the debt markets appear fairly open, I am undecided what the maintain up is precisely?  I’ve lightened up a bit on place after including to it through the tariff pushed broad market selloff.
• Spinoffs / Asset Gross sales
• Enhabit (EHAB) is a house well being and hospice operator that was spun-off of Embody Well being (EHC), following the spinoff the corporate stubbed its toe badly (as is typical for a lot of spins) because it was behind the trade shift from Medicare to Medicare Benefit plans.  A lot of that mix-shift is essentially behind them, now it’s extra of a deleveraging story with a pleasant demographic and financial tailwind.  Seniors need to keep and its cheaper to take care of them of their houses.  There’s not an apparent near-term catalyst right here, however a a number of at 9.4x EBITDA (over the last spherical of consolidation, trade friends had been taken out at double this a number of) and levered 5.4x EBITDA, a return to regular progress ought to do wonders for the share worth over time.  [Late edit, CMS proposed some pretty punitive rate action for 2026, including -5% temporary adjustment to recoup perceived overpayments from 2020-2025.  Not great if you’re overweight Medicare and leveraged.]
• Worldwide Sport Know-how (IGT) is about to alter their identify to Brightstar Lottery (BRSL) on the closing of their take care of Apollo and Everi Holdings (EVRI), rumored to occur this week.  Brightstar “received” the Italian Lotto rebid that features a 2.23 million Euro upfront price, considerably increased than many anticipated.  We must always discover out extra detailed capital return plans within the close to future, which could spark an extended replace from me together with revisions to my valuation pondering after the Italian lotto bid and higher accounting for the non-controlling pursuits.
• Seaport Leisure Group (SEG) is a group of actual property and leisure belongings positioned primarily in Manhattan (I are inclined to assume considerations over the potential new mayor are overblown) that was spun-off from Howard Hughes (HHH) final yr, Invoice Ackman’s Pershing Sq. owns just below 40% of SEG.  The corporate is advertising and marketing their 250 Water St land parcel which ought to present a catalyst, I count on the corporate to take part in a JV by contributing the land and letting their associate take the event and development danger.  CEO Anton Nikodemus and crew are laborious at work repositioning (once more) the Seaport, signing some vital leases and making an attempt to reign in prices to carry down the money burn however there’s nonetheless vital wooden to cut.  Invoice Ackman’s possession proportion looms massive right here, there are some majority possession restrictions on the AAA baseball crew which partially drove the spinoff, however the market is probably going closely discounting SEG on the anticipation of Ackman shifting worth to himself one way or the other. 
• Different / Legacy Holdings
• Artistic Media & Group Belief (CMCT) continues to confound me a bit, this catastrophe of a REIT has considerably stabilized its dying spiral of most popular stockholders requesting redemption, the corporate then paying for in frequent inventory (which they’ve elected since CMCT does not have the money), then lastly the brand new frequent stockholders promoting at no matter worth they’ll.  As a most popular inventory holder, the sport concept would appear to counsel at this level you wouldn’t need to redeem?  CMCT has the cashflow to pay the remaining most popular dividend and has paid off the defaulted time period mortgage on the company degree, changing it with new property degree mortgages (carried out at presumed 50% LTVs?  Validating some fairness worth in the true property), basically taking a company chapter off the desk.  The corporate put out a cryptic 8-Ok this previous week the place they each appeared to reveal that they proceed to get most popular redemption requests and that they are within the means of promoting belongings (my guess, the SBA mortgage portfolio will get offered first), which could counsel that redemptions could possibly be paid in money?  Workplace properties across the nation proceed to get well in worth, their properties had been unhurt by this yr’s wildfires in Los Angeles.  L.A. has the Olympics, World Cup and Tremendous Bowl all coming within the subsequent few years which ought to proceed to offer some financial stimulus through further infrastructure within the space.  The demise of the Bay Space (their different space of focus) appears to have subsided with the AI increase.  I is likely to be a bagholder at this level, however proceed to assume there is likely to be one thing right here in case you squint, whether or not frequent stockholders see any of that worth is one other story (that is externally managed by a crew that has beforehand confirmed they don’t seem to be totally aligned with minority shareholders).
• Inexperienced Brick Companions (GRBK) is a Dallas metroplex primarily based homebuilder, at this level I solely proceed to personal it because it’s held in a taxable account.  The corporate is nicely run, appears to have some secret sauce in sourcing infill actual property (is it doable to have a aggressive benefit right here?) and trades for a bit underneath consensus 10x NTM earnings.  I proceed to carry, but when my poor efficiency continues and I’ve extra tax losses to take in, promoting some or all of GRBK is likely to be an possibility.
• Mereo BioPharma Group (MREO) is charging in direction of a key knowledge learn out of Setrusumab’s Section 3 trial with associate Ultragenyx (RARE), both a second interim evaluation in mid-2025 or a last evaluation in This autumn.  As typical, no actual opinion on the science right here, merely crossing my fingers.  Do not assume I would personal this if I managed outdoors cash.
• Par Pacific Holdings (PARR) is a downstream power firm centered on area of interest markets just like the higher Rockies and Hawaii.  The corporate has benefited from rising refining crack spreads because of a combination of tariff considerations, navy conflicts and different market elements.  That is one other nicely run firm, I like administration, however do not actually contemplate it a very actionable funding concept.  I’ve offered a little bit into this current rally and have been contemplating promote the remaining to reallocate to different new concepts.

Present Portfolio:

Fast Hits on Closed Positions:

As at all times, thanks for studying and commenting, please be at liberty to share any concepts within the remark part.

Disclosure: Desk above is my taxable account, I do not handle outdoors cash and this solely a portion of my total belongings.  Because of this, the usage of margin debt, choices or focus doesn’t totally signify my danger tolerance.