Mid Yr 2025 Portfolio Evaluation

I joke that any massive recurring convention name is incomplete with out the host commenting on how rapidly the 12 months is progressing, however right here had been are, already midway via 2025.  My efficiency struggles proceed as my portfolio misplaced -3.64% within the first half of the 12 months, versus the S&P 500 gaining 6.20%.  My long run efficiency (hopefully solely briefly) dipped beneath my objective of a 20% CAGR, the brink the place I believe the trouble is value my time.

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

Under are some fast elevator pitch summaries on my present positions.  As ordinary, a few of these had been written as much as every week in the past and may very well 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 evaluation again in September, hiring Cantor Fitzgerald, however did not utterly halt their analysis pipeline.  ATHA has one potential ALS remedy (ATH-1105) presently in a Part 1 trial with wholesome adults, the corporate is hoping to dose with precise ALS sufferers later this 12 months.  If we assume they will 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 biggest 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 usually 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 power, 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 beneath $5/share ($235MM, massive sufficient sum that it ought to be engaging to potential merger companions), it trades for $4.14/share right now, 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 biggest 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 wash 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 established order danger right here in comparison with others, HLVX has stored the road of their press releases and filings that one potential final result of the evaluation 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 Part 2b medical trial for the remedy of atopic dermatitis (power itchy / infected pores and skin).  The market does not like this deal regardless of the $75MM concurrent PIPE, IKNA is concentrating 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 anticipate 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, often there’s somewhat 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 in regards to 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 at the least $2/share (probably extra, may very well 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 evaluation 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 will be liquidating and returning money to shareholders.  The liquidation was authorised virtually unanimously (different equally located biotechs ought to take observe), the preliminary distribution is scheduled to happen within the third quarter with an estimated complete of $5.30-$5.44/share (the preliminary distribution will seemingly 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 comply with.
• M&A / Strategic 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 is just not good.  The most recent replace appeared within the 2024 10-Okay: “As a part of administration’s want to maximise worth for shareholders via 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 could be no assurance that the Firm can be profitable in reaching a negotiated partition of its co-owned acreage that might keep away from the necessity to search partition in court docket.”  About half of their web acreage is held via a 16.67% possession in three way partnership, it sounds just like the main bidder does not wish to be a part of the JV (comprehensible!) and desires 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 seemingly meaningfully above the present $10-$11 share value, 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 sturdy operators having run this playbook just a few occasions the place they chip away on the effectivity ratio and finally promote their financial institution holding firm investments to bigger establishments.  Within the meantime, they plan to pay 90+% of web revenue as a dividend which ought to make MCHB eligible for inclusion in some dividend ETFs and appeal to different revenue centered buyers.  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 right now’s $13 HMST share value.
• Earnings Alternative Realty Traders (IOR) days in public markets ought to be numbered.  The corporate is extremely easy, the vast majority of the property are in a cash-like receivable from the exterior supervisor, with the rest in a observe to an inexpensive housing improvement.  In January, the controlling household through Transcontinental Realty Traders (TCI) accomplished a young provide the place they had been solely shake out 21,128 shares of IOR at $18/share (versus a e book worth of $30.22/share) (in the event you learn via 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 value.
• NSTS Bancorp (NSTS) is a small transformed thrift positioned on the outskirts of Chicago’s northern suburbs.  NSTS handed its three 12 months cooling off interval in January and may now be acquired, shareholders are pushing the financial institution to promote itself and administration does not look like standing in the way in which.  Tangible e book 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 12 months, 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 unsure 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 business shift from Medicare to Medicare Benefit plans.  A lot of that mix-shift is basically behind them, now it’s extra of a deleveraging story with a pleasant demographic and financial tailwind.  Seniors wish 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, business friends had been taken out at double this a number of) and levered 5.4x EBITDA, a return to regular development ought to do wonders for the share value 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 Expertise (IGT) is about to vary their title 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 charge, considerably greater than many anticipated.  We should 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 considering after the Italian lotto bid and higher accounting for the non-controlling pursuits.
• Seaport Leisure Group (SEG) is a set of actual property and leisure property positioned primarily in Manhattan (I are likely to assume issues over the potential new mayor are overblown) that was spun-off from Howard Hughes (HHH) final 12 months, 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 anticipate the corporate to take part in a JV by contributing the land and letting their companion take the event and building danger.  CEO Anton Nikodemus and workforce are laborious at work repositioning (once more) the Seaport, signing some essential leases and attempting to reign in prices to carry down the money burn however there’s nonetheless important wooden to cut.  Invoice Ackman’s possession proportion looms massive right here, there are some majority possession restrictions on the AAA baseball workforce which partially drove the spinoff, however the market is probably going closely discounting SEG on the anticipation of Ackman shifting worth to himself by some means. 
• Different / Legacy Holdings
• Artistic Media & Group Belief (CMCT) continues to confound me a bit, this catastrophe of a REIT has considerably stabilized its loss of life spiral of most popular stockholders requesting redemption, the corporate then paying for in widespread inventory (which they’ve elected since CMCT does not have the money), then lastly the brand new widespread stockholders promoting at no matter value they’ll.  As a most popular inventory holder, the sport principle would appear to recommend at this level you wouldn’t wish 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 (performed at presumed 50% LTVs?  Validating some fairness worth in the actual property), basically taking a company chapter off the desk.  The corporate put out a cryptic 8-Okay 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 technique of promoting property (my guess, the SBA mortgage portfolio will get offered first), which could recommend that redemptions may very well be paid in money?  Workplace properties across the nation proceed to get better in worth, their properties had been unhurt by this 12 months’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 supply 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 may be a bagholder at this level, however proceed to assume there may be one thing right here in the event you squint, whether or not widespread stockholders see any of that worth is one other story (that is externally managed by a workforce 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 properly run, appears to have some secret sauce in sourcing infill actual property (is it potential to have a aggressive benefit right here?) and trades for a bit beneath consensus 10x NTM earnings.  I proceed to carry, but when my poor efficiency continues and I’ve extra tax losses to absorb, promoting some or all of GRBK may be an possibility.
• Mereo BioPharma Group (MREO) is charging in direction of a key information learn out of Setrusumab’s Part 3 trial with companion Ultragenyx (RARE), both a second interim evaluation in mid-2025 or a closing evaluation in This fall.  As ordinary, 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 growing refining crack spreads on account of a mix of tariff issues, army conflicts and different market elements.  That is one other properly run firm, I like administration, however do not actually think about it a very actionable funding thought.  I’ve offered somewhat 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 happy 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 property.  Because of this, using margin debt, choices or focus doesn’t totally symbolize my danger tolerance.