The New Merger Arbitrage ETF Is Likely to Fail [View article]
I think the overriding driver is what happens to acquirers after the announcement and before closing of the deal. The target is sold off by long term investors who reallocate in anticipation of the closing. Arbitrageurs acquire the target and at the same time sell the acquirer. So there is selling pressure on the acquirer above and beyond normal market action. I would expect acquirers to underperform systematically post-announcement. If you are short the index rather than the acquirer you loose more than with a real arbitrage strategy that shorts the acquirer.
On Nov 10 10:23 PM jmann83 wrote:
> It is an arbitrage in a sense they are betting on the spread between > the target and the relative index to widen, and to a degree there > would be a statisical correlation between those stocks and the index, > but I agree why wouldn't they short the acquirer or a basket of potential > acquire's, the volatility would probably be lower as the portfolio > would be more sector neutral.
Three New China Stocks Might Be Coming to Market [View article]
Where did you get the cash/share number from? Looks like it's fully diluted cash/share. But in a liquidation the warrants expire worthless so you don't need to account for them. TMI, for example, pays $7.91 for the no-votes and will have similar liquidation proceeds, as opposed to the $6.48c/s that you quote. For more on SPAC liquidations, see my January post about SPAC liquidation arbitrage.
Hedge Fund Tracking: Harbinger Capital (Philip Falcone) [View article]
You should not interpret 13F filings too much. They only report long positions. You don't know the short side of the trade. For a fund like Harbinger, the short makes all the difference. CPO, for example, is likely to be merger arb play and will have an offsetting short in BG. So what if they added to CPO at 50+? They probably shorted BG at 110 and locked in the spread.
An Evaluation of the SEC’s Prohibition on Naked Short Selling [View article]
Let me clarify that I am not supporting naked short selling at all. I am saying in my post that the SEC should implementing Reg SHO, which already bans naked shorting, and that there is no need for duplicate regulation. The Deal Sleuth
The New Merger Arbitrage ETF Is Likely to Fail [View article]
On Nov 10 10:23 PM jmann83 wrote:
> It is an arbitrage in a sense they are betting on the spread between
> the target and the relative index to widen, and to a degree there
> would be a statisical correlation between those stocks and the index,
> but I agree why wouldn't they short the acquirer or a basket of potential
> acquire's, the volatility would probably be lower as the portfolio
> would be more sector neutral.
Three New China Stocks Might Be Coming to Market [View article]
For more on SPAC liquidations, see my January post about SPAC liquidation arbitrage.
Ackman Optimistic About Target’s and Hedge Fund Activists' Futures [View article]
Wal-Mart (WMT) says it launched a pilot program in December to open convenience stores in China, hoping to boost its presence in the fast-growing retail market. [View news story]
Hedge Fund Tracking: Harbinger Capital (Philip Falcone) [View article]
An Evaluation of the SEC’s Prohibition on Naked Short Selling [View article]
I am saying in my post that the SEC should implementing Reg SHO, which already bans naked shorting, and that there is no need for duplicate regulation.
The Deal Sleuth
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