October 2022 Mid-Month Update – Risk Remains To The Downside
Summary:
- Both the Biohaven deal discussed in our May 2022 Mid-Month update and the Bluerock Residential Growth REIT deal discussed in our January 2022 Special Situation Newsletter closed during the last two weeks. Both included a spinoff, new Biohaven (BHVN) and Bluerock Homes Trust (BHM). I am selling both spinoffs.
- The latest CPI figure indicates inflation remains stubbornly high despite increasing rates and the risk remains to the downside. Any rallies should be perceived as bear market rallies fueled by oversold conditions and short covering.
- The macro environment continues to deteriorate with the pension fund situation in Britain, the risk of the proxy war with Russia escalating and a Cold War of sorts with China.
Most pharma deals tend to close in relatively short periods and the Pfizer’s acquisition of Biohaven was no exception. The deal, which was announced in May 10, 2022 closed 146 days later on October 3, 2022. We discussed the deal in our May 2022 Mid-Month update when the stock was trading at $141, providing upside of $7.50 per share on the $148.50 per share all cash deal. The deal also included a kicker that we discussed in our last Insider Weekends article where we wrote the following,
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