Special Situations Merger Arbitrage
We have posts on the SAVE merger going on in the trading thread that is a little busier than usual. It's best to just have a thread for special situations, merger arb. This thread is strictly for special situations and arbitrage.
For those who are not familiar with this type of investing it is a proven strategy for small investors to achieve double digit returns. Warren Buffett grew his firm in his early days with this strategy. Granted, his 30% returns are likely above the average persons capabilities the strategy is still worthwhile. According to Bing AI assistant the definition of special sits are
Special situations in investing refer to unusual events that compel investors to buy a stock or other asset in the belief that its price will rise 1. These events have little to do with the underlying fundamentals of the stock or any other rationale that investors ordinarily use to select investments 1. Instead, they are an attempt to profit from a potential rise in valuation that the special situation presents 1.
Special situation investment opportunities can take many forms and involve a number of asset classes 1. They often arise from breaking news stories or rumors of news about to break 1. They may concern spinoffs, tender offers, mergers, acquisitions, bankruptcy, litigation, capital structure dislocations, shareholder activism, stock buybacks, and any other event that might affect a companyÂ’s short-term prospects 1.
There are investment funds that are dedicated to exploiting special situations. They usually have “Event Driven” or “Opportunistic” in the names of the funds 1. One variation of this investing strategy concentrates on distressed and special situation assets. These investors seek to identify and buy assets that have been underappreciated by the markets for various reasons and are correspondingly cheap 1.
I haven't done a lot of these but when I did I focused on going private transactions and shareholder approved all cash mergers.
This is the SEC website to search for filings schedule 13E-3 and S-4.
https://www.sec.gov/edgar/search/#
I get good results just searching "merger" on the site too. There used to be a couple websites that listed all mergers. I haven't seen one lately.
11 Replies
SAVE acquisition rejected by the judge. Stock down ~50%
"arbitrage"
Crashing into oblivion. Portnoy posted he was buyin in like mins before the crash. Worst luck ever, I know it well. I embrace it, Portnoy is a leader among all cursed gamblers. All hail Portnoy. CAn not.... do it better then he did today. All time worst.....LEGEND
Classic gambel. So much upside....
Portnoy, the Prince of Manlets, lol.
Watching him melt down over his ETrade account was pretty funny though.
irobot also blocked, -60%
[quote="Reuters"]Exclusive: Amazon to win unconditional EU nod for iRobot deal -sources
By Foo Yun Chee
BRUSSELS, Nov 23 (Reuters) - Amazon (AMZN.O), is set to win unconditional EU antitrust approval for its $1.4 billion acquisition of robot vacuum maker iRobot (IRBT.O), three people familiar with the matter said on Thursday.[/quote]
*slow clap for Reuters*
they say there's no money in journalism but i wonder if foo yun chee was able to cash in on this shoddy story
new merger angle: fade any to-be-acquired stock that has news reports saying it's a done deal but is still trading at an unreasonable discount to acquisition price
There seems to be very little consistency, in these judicial proceedings, in a way that's unfair.
Microsoft was allowed to acquire Activison for 68 billion dollars, despite Microsoft owning XBox, Berkshire was allowed to acquire an insurance business Alleghany for 12 billion dollars, despite Berkshire being the largest insurer in the world, but then all of a sudden the acquisition of Spirit and IRobot, is somehow anti competitive.
It's a big win for the bigger airlines, if Spirit now goes bankrupt. It's also a win for Amazon, because iRobot's earnings have been going down a lot recently.
It's pretty classic of government, achieving the opposite of what they intended.
JetBlue and Spirit now appealing the judge’s ruling, that blocks their proposed merger.
In the past, Delta airlines has acquired Norwest and Comair airlines.
Blocking the Jetblue and Spirit merger is completely hypocritical and ridiculous.
If you own a business be it a coffee shop, a shoe shop or an airline, you have a right to sell it, if you want.
They can sell it, just not to JBLU. Maybe they could sell to Frontier, but I'm sure the DOJ would take that to trial too and say that Frontier would plan to raise prices on at least one of their 1,000 routes. Apparently that's all it takes to violate the statute, according to the 81-year-old judge (who I think had had only one anti-trust case in his whole career) who just decided this precedent. His ruling said he couldn't allow the merger because doing so might not "protect every consumer, in every relevant market from harm." They could sell it to a private buyer.
Kroger and Albertsons agree to pause merger.
Arbitrage, baby.
