10 Arbitrage Stocks To Buy As Market Hits Historic Highs

Summary

  • All 10 of my M&A recommendations from my November article closed.
  • Arb stocks a good place to hide as a near-term pullback seems possible.
  • 10 deal stocks to buy now.

10 Deals to BuyIn the past few days I received several notes thanking me for my November 1st article titled 10 Arbitrage Stocks to Buy as Market Wobbles. With the USG Corp (USG) merger now closed, that means all 10 of the deals I recommended have closed. At the time of the article at least half of the 10 were up in the air at best.

As I write now, unlike in November, the stock market has been advancing. But with the major indexes at former highs this could be a time the market pauses, corrects or even reverses.

One way to play uncertainly is to buy M&A stocks. Here are 10 that I feel have good value now.

STOCK DEAL PRICE CURRENT SPREAD IRR
CELG $50 + 1 share of BMY $93.10 1.9% *5.8%
FDC .303 shares of FISV $25.64 3.3% 9.1%
GNW $5.43 $3.77 44% **131%
MLNX $125 $120.81 3.5% 5.3%
ONCE $114.50 $110.67 3.5% 42.3%
RHT $190 $182.51 4.1% 8.4%
UQM $1.71 $1.65 3.6% 21.6%
UWN ***$2.53 $2.47 2.43% 9.71%
VSM $53 $52.05 1.9% 3.6%
FNSR $15.60 + .2218 shares of IIVI $24.36 1.4% 8.4%

*Does not include CVR

**Assumes close in 4 months.

***The deal price will increase by 2 cents per month starting May 1 (prorated)

10 Deals I Am Buying

CELG-The Bristol-Myers Squibb (BMY)/ Celgene (CELG) spread was in the teens after Wellington Management, the largest institutional holder of Bristol’s common stock at about 8 percent, opposed the tie-up and Starboard Value sent a letter to BMY shareholders saying the proposed merger was ill advised. Despite all that, BMY shareholders voted to approve and the spread sank to 5% and has bled down to just 2% now. Putting the spread on when deal doubt was present was a great trade, but even

This article was written by

I am an experienced individual investor who has been trading merger arbitrage stocks and options since the 90's. I am a writer with a Master of Science from Northwestern University and I truly enjoy writing articles about the stock market. I try to look for opportunities where the odds are in my favor and there is a definite edge. On Seeking Alpha my articles will aim to provide insight and favorable risk/reward for the readers.However, I am not an investment advisor so any recomendations or ideas I write about in my articles, blogs, or comments shouldn't be taken as investment advice. I recommend using my writings as a starting point to which you should add your own research or that of an investment advisor. "Any time you make a bet with the best of it, where the odds are in your favor, you have earned something on that bet, whether you actually win or lose the bet. By the same token, when you make a bet with the worst of it, where the odds are not in your favor, you have lost something, whether you actually win or lose the bet." -David Sklansky, "The Theory of Poker"

Disclosure: I am/we are long CELG, RHT, FDC, ONCE, MLNX, GNW, VSM, UQM, UWN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I also have options on almost all on the above stocks.

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