Mid Year 2025 Portfolio Review

I joke that any large recurring conference call is incomplete without the host commenting on how quickly the year is progressing, but here were are, already halfway through 2025.  My performance struggles continue as my portfolio lost -3.64% in the first half of the year, versus the S&P 500 gaining 6.20%.  My long term performance (hopefully only temporarily) dipped below my goal of a 20% CAGR, the threshold where I think the effort is worth my time.

My biggest contributors thus far have been Par Pacific Holdings (PARR), Third Harmonic Bio (THRD) and ACRES Commercial Realty (ACR); with the biggest distractors being Creative Media & Community Trust (CMCT), Mereo BioPharma Group (MREO) and 23andMe Holdings (ME).

Below are some quick elevator pitch summaries on my current positions.  As usual, some of these were written up to a week ago and could be slightly stale. 

Current Positions:

• Broken Biotechs
• Athira Pharma (ATHA) has a market capitalization of ~$12.1MM despite having $33.7MM in NCAV as of 3/31.  This busted biotech announced a strategic review back in September, hiring Cantor Fitzgerald, but didn’t completely halt their research pipeline.  ATHA has one potential ALS therapy (ATH-1105) currently in a Phase 1 trial with healthy adults, the company is hoping to dose with actual ALS patients later this year.  If we assume they’ll burn another $15MM (currently spending ~$9MM/quarter) chasing the drug development ghost and on any strategic transaction expenses, liquidation value comes in around $0.48/share versus a current quote of $0.31/share.  That’s before ascribing anything for the public listing or IP value with ATH-1105.  Perspective Advisors is the largest shareholder with ~14% of the shares outstanding, they previously indicated in a 13D filing they have been in discussions with management on a reverse merger or other transaction.  BML owns 8% and has been more active in pushing for liquidations recently.  This situation isn’t as clean as I typically like and has a significant ongoing burn, but I continue to hold a small position.
• CARGO Therapeutics (CRGX) fully waived the white flag on 3/18, did a 90% reduction in force, suspended all drug development and appointed a new CEO to run the strategic alternatives process.  The stock responded and closed much of the gap to my estimate of liquidation value, which is still a bit under $5/share ($235MM, large enough sum that it should be attractive to potential merger partners), it trades for $4.14/share today, representing a fair amount of upside still remaining.  Madison Avenue Partners and Kevin Tang each own about 6.5%.
• ESSA Pharma (EPIX) is trading for $1.75/share and my estimate of its liquidation value is approximately $2.10/share.  9.5% shareholder BML and 5.1% shareholder Soleus Capital Management have both written public letters to the board pushing for a liquidation.  Kevin Tang is also here with a 9.7% stake, but BVF Partners is the largest shareholder at 20%.  In the Q1 results (filed after the Soleus & BML letters), EPIX included the line “we have taken productive steps towards a decision and hope to share an update in the near future.”  That was 53 days ago, hopefully a resolution will take place shortly.
• HilleVax (HLVX) is the oldest in the basket, having stopped development efforts last July and later announced their strategic alternatives process in August.  My estimation of liquidation value is approximately $2.50/share (HLVX still has their operating lease to clean up, I’m valuing it at a 50% haircut to the full face amount) compared to a current quote of $1.90/share.  The shareholder registry here is a little more traditional biotech centric with Frazier Life Sciences owning 21%, Takeda owning 13.5%, but Kevin Tang is lurking with just under 10%.  There is more status quo risk here compared to others, HLVX has kept the line in their press releases and filings that one potential outcome of the review is to pursue continued development of their vaccines in adults (they originally targeted infants in the failed trial).
• In late December, Ikena Oncology (IKNA) entered into a reverse-merger agreement with InmageneBio (IMA) whose lead asset IMG-007 has an ongoing Phase 2b clinical trial for the treatment of atopic dermatitis (chronic itchy / inflamed skin).  The market doesn’t like this deal despite the $75MM concurrent PIPE, IKNA is targeting $100MM net cash at close or ~$2.05/share versus a current quote of $1.35.  I recently voted against the merger, but still expect the deal to go through as 25.8% of IKNA shareholders have signed on to a support agreement (although BML, 8.4% shareholder, has popped up saying they’re voting against the deal).  Even in these disappointing deals, occasionally there’s a little pop after close as the shareholder base turns over.
• No major news at Mural Oncology (MURA), development has been fully halted and the company is pursuing strategic alternatives.  My estimation of liquidation value is $3.25/share against a current quote of $2.50/share.  There is some good discussion in the comments about the two-year safe harbor for spins (would falloff this November) and Irish takeover rules pushing this towards being acquired or a reverse merger versus a liquidation.
• Repare Therapeutics (RPTX) is a busted biotech with a liquidation value of at least $2/share (possibly more, could be some IP value), but nothing really notable has changed since my write-up last month.  One slight positive, they did include a new line in their 10-Q making the strategic review more clear, from the MD&A section: “We plan to explore a full range of strategic alternatives and partnerships across our portfolio to maximize shareholder value.”
• In April, only two short months after announcing strategic alternatives, Third Harmonic Bio (THRD) announced it would be liquidating and returning cash to shareholders.  The liquidation was approved almost unanimously (other similarly situated biotechs should take note), the initial distribution is scheduled to take place in the third quarter with an estimated total of $5.30-$5.44/share (the initial distribution will likely be 90-95% of this value).  This doesn’t include any proceeds from the sale of THB335 (here’s what appears to be the asset sale deck).  Along with AVTE or ABIO, a model for other broken biotechs to follow.
• M&A / Strategic Alternatives Processes
• CKX Lands (CKX) is a microcap Louisiana land bank that started a strategic alternatives process almost two years ago (August 2023), admittedly the success rate for long drawn out processes is not good.  The latest update appeared in the 2024 10-K: “As part of management’s desire to maximize value for shareholders through this process, the Company expects to seek to partition, in kind or by sale, ownership of its undivided interests in lands co-owned with others. There can be no assurance that the Company will be successful in reaching a negotiated partition of its co-owned acreage that would avoid the need to seek partition in court.”  About half of their net acreage is held through a 16.67% ownership in joint venture, it sounds like the leading bidder doesn’t want to be part of the JV (understandable!) and wants the acreage partitioned/subdivided which could take significantly more time or not happen at all.  There’s not much else to go on here, fair value is still likely meaningfully above the current $10-$11 share price, but any failure to sell the company means CKX is likely in forgotten microcap purgatory for another decade.
• HomeStreet (HMST) is a west-coast regional lender that was caught up in the 2023 banking crisis, originally they sold themselves to FirstSun Capital Bancorp (FSUN) in January 2024, but that deal faced regulatory scrutiny over the combined entities CRE exposure and the deal was terminated in November 2024.  HMST then went about another sale process, leading to an all-stock deal with California based Mechanics Bank (MCHB) which effectively is a reverse merger, MCHB is private with limited liquidity on the OTC market, their shareholders will own 91.7% of the combined company.  The controlling shareholder of MCHB is the Ford Financial Fund, their principals are strong operators having run this playbook a few times where they chip away at the efficiency ratio and ultimately sell their bank holding company investments to larger institutions.  In the meantime, they plan to pay 90+% of net income as a dividend which should make MCHB eligible for inclusion in some dividend ETFs and attract other income focused investors.  The transaction is scheduled to close September 1st, Mechanics Bank is guiding to $1.31/share in 2026 EPS, which would equate to a 10x earnings multiple on a forward basis at today’s $13 HMST share price.
• Income Opportunity Realty Investors (IOR) days in public markets should be numbered.  The company is incredibly simple, the majority of the assets are in a cash-like receivable from the external manager, with remainder in a note to an affordable housing development.  In January, the controlling family via Transcontinental Realty Investors (TCI) completed a tender offer where they were only shake out 21,128 shares of IOR at $18/share (versus a book value of $30.22/share) (if you read through the multiple tender offer amendments, it appears some shareholders backed out of the tender) to bring their ownership above the 90% level (allowing them to perform a squeeze out in Nevada).  Since the close of the tender, TCI has continued to buy shares in the open market adding another 33,524 shares, all below the $18/share tender offer.  Recently, shares have drifted closer to $19, soon the controlling family is likely going to determine they’ve run out of disinterested sellers (very little public float is remaining) to purchase shares from and do a squeeze out.  Hopefully at a more equitable price.
• NSTS Bancorp (NSTS) is a small converted thrift located on the outskirts of Chicago’s northern suburbs.  NSTS passed its three year cooling off period in January and can now be acquired, shareholders are pushing the bank to sell itself and management doesn’t appear to be standing in the way.  Tangible book value of ~$15/share seems like a nice floor on any takeout, NSTS currently trades for $12.25/share.
• Soho House & Co (SHCO) is an operator of private social clubs, late last year, the company announced it had received a $9/share cash offer from a consortium that includes Executive Chairman Ron Burkle.  In late January, Dan Loeb’s Third Point (9.9% owner) sent a letter to the Soho House board pushing for a better deal.  Since then, the company has been mysteriously quiet, the debt markets seem pretty open, I’m not sure what the hold up is exactly?  I’ve lightened up a bit on position after adding to it during the tariff driven broad market selloff.
• Spinoffs / Asset Sales
• Enhabit (EHAB) is a home health and hospice operator that was spun-off of Encompass Health (EHC), following the spinoff the company stubbed its toe badly (as is typical for many spins) as it was behind the industry shift from Medicare to Medicare Advantage plans.  Much of that mix-shift is largely behind them, now it is more of a deleveraging story with a nice demographic and economic tailwind.  Seniors want to stay and its cheaper to care for them in their homes.  There’s not an obvious near-term catalyst here, but a multiple at 9.4x EBITDA (during the last round of consolidation, industry peers were taken out at double this multiple) and levered 5.4x EBITDA, a return to steady growth should do wonders for the share price 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.]
• International Game Technology (IGT) is about to change their name to Brightstar Lottery (BRSL) on the closing of their deal with Apollo and Everi Holdings (EVRI), rumored to happen this week.  Brightstar “won” the Italian Lotto rebid that includes a 2.23 million Euro upfront fee, significantly higher than many expected.  We should find out more detailed capital return plans in the near future, which might spark a longer update from me including revisions to my valuation thinking after the Italian lotto bid and better accounting for the non-controlling interests.
• Seaport Entertainment Group (SEG) is a collection of real estate and entertainment assets located primarily in Manhattan (I tend to think concerns over the potential new mayor are overblown) that was spun-off from Howard Hughes (HHH) last year, Bill Ackman’s Pershing Square owns just under 40% of SEG.  The company is marketing their 250 Water St land parcel which should provide a catalyst, I expect the company to participate in a JV by contributing the land and letting their partner take the development and construction risk.  CEO Anton Nikodemus and team are hard at work repositioning (again) the Seaport, signing some important leases and trying to reign in costs to bring down the cash burn but there’s still significant wood to chop.  Bill Ackman’s ownership percentage looms large here, there are some majority ownership restrictions on the AAA baseball team which partially drove the spinoff, but the market is likely heavily discounting SEG on the anticipation of Ackman shifting value to himself somehow. 
• Other / Legacy Holdings
• Creative Media & Community Trust (CMCT) continues to confound me a bit, this disaster of a REIT has somewhat stabilized its death spiral of preferred stockholders requesting redemption, the company then paying for in common stock (which they have elected since CMCT doesn’t have the cash), then lastly the new common stockholders selling at whatever price they can.  As a preferred stock holder, the game theory would seem to suggest at this point you would not want to redeem?  CMCT has the cashflow to pay the remaining preferred dividend and has paid off the defaulted term loan at the corporate level, replacing it with new property level mortgages (done at presumed 50% LTVs?  Validating some equity value in the real estate), essentially taking a corporate bankruptcy off the table.  The company put out a cryptic 8-K this past week where they both seemed to disclose that they continue to get preferred redemption requests and that they’re in the process of selling assets (my guess, the SBA loan portfolio gets sold first), which might suggest that redemptions could be paid in cash?  Office properties around the country continue to recover in value, their properties were unharmed by this year’s wildfires in Los Angeles.  L.A. has the Olympics, World Cup and Super Bowl all coming in the next few years which should continue to provide some economic stimulus via additional infrastructure in the area.  The demise of the Bay Area (their other area of concentration) seems to have subsided with the AI boom.  I might be a bagholder at this point, but continue to think there might be something here if you squint, whether common stockholders see any of that value is another story (this is externally managed by a team that has previously showed they’re not fully aligned with minority shareholders).
• Green Brick Partners (GRBK) is a Dallas metroplex based homebuilder, at this point I only continue to own it since it’s held in a taxable account.  The company is well run, seems to have some secret sauce in sourcing infill real estate (is it possible to have a competitive advantage here?) and trades for a bit under consensus 10x NTM earnings.  I continue to hold, but if my poor performance continues and I have excess tax losses to soak up, selling some or all of GRBK might be an option.
• Mereo BioPharma Group (MREO) is charging towards a key data read out of Setrusumab’s Phase 3 trial with partner Ultragenyx (RARE), either a second interim analysis in mid-2025 or a final analysis in Q4.  As usual, no real opinion on the science here, merely crossing my fingers.  Don’t think I’d own this if I managed outside money.
• Par Pacific Holdings (PARR) is a downstream energy company focused on niche markets like the upper Rockies and Hawaii.  The company has benefited from increasing refining crack spreads due to a mixture of tariff concerns, military conflicts and other market factors.  This is another well run company, I like management, but don’t really consider it a particularly actionable investment idea.  I’ve sold a little into this recent rally and have been considering sell the rest to reallocate to other new ideas.

Current Portfolio:

Quick Hits on Closed Positions:

As always, thank you for reading and commenting, please feel free to share any ideas in the comment section.

Disclosure: Table above is my taxable account, I don’t manage outside money and this only a portion of my overall assets.  As a result, the use of margin debt, options or concentration does not fully represent my risk tolerance.