The end of the month brought a bank merger to the table with M&T acquiring Peoples Bank in an all-stock deal – .118 shares of MBT for each share of PBCT. I became an owner of PBCT via their acquisition of UBNK and at that time said, “I plan to hold this one as I wouldn’t be surprised if PBCT gets taken out at some point.” Now that that point has arrived, I exited my PBCT position booking a profit. The main reason is that if successful, the result would be a cut in the dividend for the possibility of future growth. Or in the words of J. Wellington Wimpy, “I’ll gladly pay you Tuesday for a hamburger today.” A valid concern arises as to whether Tuesday arrives based on MBT’s performance with their last merger and the current role Sen. Elizabeth Warren plays and her passion surrounding ‘discriminatory mortgage lending practices’.
With that cash (and a little more that had been accumulating from dividends), I added to my Blackrock position. I indicated that intention in last week’s post, “(the) remaining allocated funds will be placed in Blackrock who is a PIPE investor in a multitude of SPACs.” Not that I expected excess air to be released from the SPAC balloon so quickly, just that I came to fully understand the sweetheart deals available to the PIPE investors (similar in nature to the deals Warren is able to cut). I now have a full (or close) position in BLK and I’ll continue to let my SPAC experiment play out.
Last February’s report included the initial Covid-19 impact and the start of migrating most Canadian issues into the IRA. In review, one mistake is evident – the purchase of Coca-Cola Japan (the Olympics were delayed and dividend suspended). What a difference a year makes as most suspended dividends have been reinstated, although some at lower levels. The portfolio recovered from January’s miss and rose 4.16%, largely in lockstep with the yield curve. The S&P rose 2.61% putting me ahead for the year by 1.31%. Dividends rose year-on-year by 39.92% largely on the back of Power Corp which appears to have become a February payor from a March one in years past. My 2021 run rate is now tracking positive but under the standard 10% increase goal. One positive surprise is that after two months, dividend increases are averaging 9.31% with 26.9% of the portfolio declaring at least one.
Positions Sold
Peoples Bank as discussed above.
Positions Increased
The only one of note is Blackrock (see above). The others are smallish purchases to reduce (and ultimately eliminate) fractional only shares in the portfolio.
Pending Mergers
Switchback Energy Acquisition – shareholder approval received, should commence trading as CHPT March 1st.
TPG Pace Beneficial Finance Corp – EVBox merger in progress, no shareholder vote yet
Tortoise Acquisition Corp. II Class A – Volta Industries merger in progress
Coca-Cola European Partners increased their offer for Coca-Cola Amatil to $13.50aud from $12.75aud on February 14th, now securing my vote in favor of the combination. Estimated to close in May.
Spinoffs
IBM announced a separation into two companies, details to follow.
Here’s hoping your month was good as well!
Seeking Returns 