By Cable Car Capital LLC Recent performance in the Hedged Value portfolio is largely attributable to positions previously discussed on Smarter Investing. Cable Car took advantage of market volatility to add to its position in Retrophin (RTRX) in late April. We trimmed modestly one month later, as the position size approached the portfolio’s concentration limit. RTRX remains the largest holding in the Hedged Value portfolio, followed by Intercontinental Exchange Inc. (ICE).
On May 27, Retrophin announced the sale of the Pediatric Rare Disease Priority Review Voucher mentioned on Covestor to Sanofi (SNY) for $245 million. The sales price was the highest on record for a priority review voucher and more than double the accounting value of the voucher. The windfall offers a significant additional boost to Retrophin’s balance sheet.
In May, Cable Car closed its short position in foreign exchange broker FXCM. While the market value has approached, but not quite reached, a reasonable estimate of the remaining equity value, shares have continued to exhibit extreme volatility upon the announcement of asset dispositions and other news. While it is possible shares will ultimately receive little or no recovery, they currently exhibit option value dependent upon the future performance of the business. While sustained improvement remains unlikely, FXCM shares may present better valuation opportunities in the future.