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  • Merger Arbitrage Blog- Part 4 [View instapost]
    rijk- thanks for sharing that......sounds like that group has no idea exactly what they are for or against. Against the merger for monopoly reasons, but against drug approval because it's improperly tested and has questionable value?

    Citron wannabes, it appears on first glance? Happy Thanksgiving, everyone. AT.
    Nov 27, 2015. 09:24 AM | Likes Like |Link to Comment
  • What Has Become Of Risk Arbitrage? [View article]
    Google 'portfolio margin', MS. IB offers it to retail customers above a $ amt. Leverage is not a big deal if you use shorts or puts to reduce downside risk....

    A fund I get info on uses 2-3x leverage. 10% annualized the past 4 years, after the 1.5/20. I can usually do better than that on less leverage (no expensive overhead for me, and I ignore the stupid alpha/beta stats).

    It's not for everyone. I don't use it, but it has it's place. Esp if you are using OPM!! (haha) Best, AT

    BTW, portfolio margin is incredibly useful for say DYAX or where you want to own a CVR. You buy equity, buy nearby puts with 1-2 weeks left in the deal. The broker PM metric uses the 'risk' as the diff betw put strike, and your equity price. Repeat. You can have a massive long backed by puts you bt for 5-15cents. I saw this in the options tables for the Safeway CVR and elsewhere. It was really obvious the last couple days it traded.
    Nov 26, 2015. 09:33 AM | Likes Like |Link to Comment
  • Is There An Imminent Merger Arbitrage Opportunity In Perseon? [View article]
    yeah, no finance=scary. Plus w the lack of liquidity at this market cap no institutions will touch it, to buy or sell. Roach motel factor...easy in, hard to get out. That said, I bt when the PR came out, may sell on this spike.

    Best, AT.
    Nov 25, 2015. 11:31 AM | Likes Like |Link to Comment
  • A Happy Thanksgiving For GE Dealmakers And Shareholders [View article]
    Yes, Chris used his time machine to get the vote results in advance, Yuanxi!

    haha. Yes the vote is tomorrow, the 25th. Sloppy editing, I suppose.

    Best, AT.
    Nov 24, 2015. 06:10 PM | 2 Likes Like |Link to Comment
  • What Has Become Of Risk Arbitrage? [View article]
    One issue not mentioned above that I've been able to exploit vs arb funds is the extreme avoidance of 'risk.' The risk can be in the form of deal risk or just perceived risk. The easiest way to exploit this is a selloff very late in the deal cycle, usually if prices break through a perceived support level. Whoosh! Down the stock goes. It takes work, but it's relatively easy to do if you have the stones for it.

    Clearly the funds need to keep their statistical results in line with their peers: low volatility, generate alpha, and low beta vs the broad markets.

    Finally, I have extreme suspicion of those high priced 'research firms'. Having occasional access to their proprietary research in the past, it's stunning how wrong they have been either in terms of timing or actual approval (given what they charge). The DOJ/FTC does a good job of keeping their lips zipped, except for the staffer who chats up the writer at the New York Post.

    Good article. AT.

    PS- you are right. the Arb mutual funds are just terrible. But PM's love them because it helps them fill out a financial plan and look smart.
    Nov 24, 2015. 02:11 PM | 1 Like Like |Link to Comment
  • Merger Arbitrage Blog- Part 4 [View instapost]
    DYAX- there was a slide in the deck for the deal where they indicate they drugs are complementary vs a total replacement. However, with out the official FDA label it's all speculation at this point, isn't it? Shire wants to be the ax for this malady and they are going to buy the upstart, and hopefully it's a better drug. But that's a couple years in the future....Best, AT
    Nov 19, 2015. 10:53 AM | Likes Like |Link to Comment
  • Is There A Merger Arbitrage Opportunity In Dyax? [View article]
    Lo-Pro, that's my HSR argument too, but is there a precedent for HSR issues for a drug that has not even finished it's trials yet, much less received FDA approval?

    And after that you have the label/dosage/restricti... etc.

    It's a big leap for the FTC/DOJ to make 4-5 years into the future.

    Best, AT.
    Nov 19, 2015. 08:55 AM | 1 Like Like |Link to Comment
  • Merger Arbitrage Blog- Part 4 [View instapost]
    MDAS- MT looking hard at this one. It looks pretty clean but the proxy filing would help fill in the blanks.
    Strikes against it: PE, a divestment of a division (but not till after the close) and ??. Leveraged loans getting worse so maybe a half-strike vs it depending on leverage used.

    A chinese citizen got charged w insider trading on this one but he was affiliated w TPG who apparently was the other bidder so I don't see a connex.

    Good sized co but relatively illiquid. bid-ask can be .10 or more sometimes. As we saw w OMG, can lead to sloppy trading.

    Anyone else have thoughts on this one? Pulling a high teens annualized return on this one by my calcs.
    Nov 18, 2015. 10:00 AM | Likes Like |Link to Comment
  • Is There A Merger Arbitrage Opportunity In Dyax? [View article]
    2 questions
    -why use 7 months to close? This looks like a pretty clean deal. I'm not sure why mgt guided to the 1st half, either.

    -have you seen any rumors why the spread is so abnormally wide? I have my ear to the ground and nothing has come up, but clearly someone is selling in a price-insensitive way.

    Best, AT.
    Nov 18, 2015. 09:15 AM | 1 Like Like |Link to Comment
  • The Future Of GCVRZ [View article]
    Thanks for your thoughts on this one, Ruerd. Your work and the follow up has been quality stuff. Best, AT.
    Nov 14, 2015. 11:30 AM | 1 Like Like |Link to Comment
  • The Future Of GCVRZ [View article]

    NYT did an article on it today so I'm posting a link for anyone who is interested.

    Best, AT.
    Nov 13, 2015. 05:14 PM | 1 Like Like |Link to Comment
  • Merger Arbitrage Blog- Part 4 [View instapost]
    GCVRZ- for anyone else that got hosed by the CVR there is a good NYT backstory today:
    Have a good weekend, AT.
    Nov 13, 2015. 05:06 PM | Likes Like |Link to Comment
  • Merger Arbitrage Blog- Part 4 [View instapost]
    P1 WSJ today article on leveraged loans a must read. This caught my eye:
    "Credit Suisse Group AG has been trying since early October to distribute $525 million in loans it made with other banks for private-equity firm Apollo’s buyout of OM Group. The bank has been unable to find buyers so far, and it is in the process of cutting the price of the debt, investors say."

    There was a lot going on behind the curtain in OMG. No wonder the spread blew out.....AT
    Nov 9, 2015. 09:24 AM | 1 Like Like |Link to Comment
  • Merger Arbitrage Blog- Part 4 [View instapost]
    I like CVC.

    Pros: Debt is sold, equity spoken for. This deal came out when finance started to get sloppy so that was a major concern given the size. Also not a major concentration that I see in the industry so approval incrementally easier.

    Cons: the usual bureaucratic minefield of FCC, etc plus a foreign buyer. The timeline is a ? although with TWC guiding to 12/31 or slipping into early next year this one should be just behind it by a couple months.
    Nov 9, 2015. 09:23 AM | Likes Like |Link to Comment
  • Merger Arbitrage Blog- Part Three [View instapost]
    MT- wouldn't a better comparison be Family Dollar and/or supermarket mergers? My focus is on the RE in the form of usually-prime spots on high traffic corners/good demos that simply cannot be replicated by any competitor. In smaller towns you may have 1 each of WAG and RAD (and probably CVS) and a couple locals trying to hang on. I'd love to see the overlap w/in 2-5 miles of their stores...we had that # for FDO.

    They will have to find a strong buyer to divest to, esp after the SWY transaction where one of the buyers blew up weeks after closure. Not sure who the new #3-4 would be, but that's the key buyer, IMO.

    It probably gets done, but darn FDO took a long time w even a marginal buyer doing the deal....not the #1 looking to get even bigger.

    I think you have plenty of time to buy here, but maybe I'm just trying to allocate$ in a deal-rich environment. Best, AT.
    Oct 29, 2015. 02:59 PM | Likes Like |Link to Comment