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Merger Arbitrage: How to Profit from Event-Driven

Merger Arbitrage: How to Profit from Event-Driven

Merger Arbitrage: How to Profit from Event-Driven Arbitrage by Thomas Kirchner

Merger Arbitrage: How to Profit from Event-Driven Arbitrage



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Merger Arbitrage: How to Profit from Event-Driven Arbitrage Thomas Kirchner ebook
Publisher: Wiley
ISBN: 0470371978,
Format: pdf
Page: 370


2) Event-Driven 3) Directional In event-driven hedge funds, managers look for stocks trading at discounts due to unusual circumstances. Surprisingly, John Paulson's merger arbitrage funds are returning better than his event driven strategies. Such circumstances can include merger arbitrage, distressed securities, and private placements. Event-driven funds seek to profit from securities whose value is affected by events such as mergers and acquisitions, and reorganizations. In KeyBanc's case, only the premium paid analysis looks Disclosure: Thomas Kirchner manages the Pennsylvania Avenue Event-Driven Fund [PAEDX], which owns shares of Max & Ermas Restaurants Inc. Focusing on identifying company specific catalysts such the addition or deletion of a stock from an index, the start-up of a new mine or a merger arbitrage opportunity provides a great way to maximize non-correlated long term investment returns while minimizing risk. Risk arbitrage hedge fund managers can employ an event-driven investment strategy or merger arbitrage investment strategy, seeking situations such as hostile takeovers, mergers and leveraged buyouts. Two key aspects of Perry's acquisition transactions in Mylan stock may have driven the outcome of the Perry Order. Once or twice every decade, M&A markets go through a bust and returns of merger arbitrage and event-driven funds slip. These banks benefit from the growth of the hedge fund industry as prime brokers make money on the interest they charge for debt financing and trading fees. The arbitrage fund, Paulson Enhanced, is up 10.5 percent while Paulson International is up almost 5 percent. Contrarily, Paulson Advantage and Advantage Plus are down 12.68 and 18.4 percent respectively. A common trait is that the author of the opinion goes to great lengths to discredit their own findings that the merger consideration is at the low end of, or even below, the valuation range that they determine. Merger risk arbitrage loosely refers to practices that investors use to profit from arbitrage spread opportunities typically created by cash or stock acquisitions of publicly traded companies. Let's say A merger arbitrageur might buy Circuit City shares, and short Blockbuster shares, hoping to profit from the eventual convergence of these values. Here's an example of merger arbitrage. Convertible Arbitrage consists of hedge investing in convertible usually, being simultaneously long and short within the same sector, industry, capitalization, country, etc; Event-Driven consists of exploiting the price movement generated by a corporate event related to distressed stocks, mergers, takeovers, news, etc. This article was sent to people who get email alerts on . Merger Arbitrage or relative-value strategy hedge funds which aim to profit off from mispricings while unsuccessful in others. In a stock-for-stock merger, the pre-merger arbitrage spread opportunity exists ..

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