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.
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Kroger and Albertsons agree to pause merger.
Arbitrage, baby.
