Kelly: Playing the Arbitrage on BEAS

Wednesday morning I decided to use a bit of my leverage to buy a decent sized position in (BEAS) at $18.46. This is an all cash deal from Oracle (ORCL), and they obviously have the money to pay it. The two companies have been in discussions about this deal for months, and I think that insulates the deal from the risk of problems arising before the deal closes in mid-2008. In the meantime, BEAS is trading at about a 5% discount to the deal, and a 10% annualized gain with minimal risk seems like pretty low hanging fruit given the volatility of the market. I don’t think that is insignificant, and this looks like it will become a very attractive arbitrage opportunity for the big guys.