Merger arbitrage returns are derived from a risk spread based on short-term interest rates. The FREE merger tracker spreadsheet below contains the latest essential deal information and criteria as per official company announcements of the largest 20 deal spread opportunities. A Form SC 13D/A filed with the SEC on December 3rd revealed Tencent was the majority holder with 58.2% of the company and there has been no update since then. This decline, which is both economically and statistically significant, corresponds to the decline in aggregate returns of merger arbitrage hedge funds, as well as increased inflows into merger arbitrage hedge funds. There was no new deal news made during the week but the size of the movement in the stock clearly suggests there is movement behind the scenes regarding the offer of $9.00 per share from Tencent (OTCPK:TCEHY). By the end of the week, MNA was showing a loss of (0.44)%. Prior to the spread list we review the changes to the list and upcoming any announcements to list members in the “Past, Present & Future” Table. However, subsequent movements, and the lack of available information have left us puzzled. Merger arbitrage is a market neutral form of trading that seeks to exploit inefficiencies in the stock price of a company who has agreed to sell to another company for cash, stock, or a combination of both. The strategy aims to capture the aforementioned spread that exists between the share price of the target company and the acquisition price on announced transactions, while also potentially profiting from other deal-related opportunities. We therefore decided to exit the position for a small loss, which at the time of writing appears to have been the correct decision. Merger arbitrage is the purchase and sale of the stocks of two merging companies at the same time with the goal of creating "riskless" profits. “Merger arbitrage is an active strategy. Risikoarbitrage (englisch risk arbitrage oder englisch merger arbitrage) ist eine Handels- oder Anlagestrategie, bei der ein Anleger versucht, die üblicherweise positive Preisdifferenz zwischen Angebotspreis und Aktienkurs bei öffentlichen Firmenübernahmen auszunutzen. This leaves the simple spread at 10.16%, the largest in the index. Merger arbitrage was first perfected by Benjamin Graham, one of the world’s first and most successful “value” investors. Merger Arbitrage Portfolio Research. The merger arbitrage spread has declined by more than 400 bps since 2002. Education General Merger arbitrage has several advantages and some of them are as follows: Merger arbitrage strategies are focussed on limited downside risk coupled with informed decision making. Merger arbitrage trading is not without risks. Have time to share an article? For more proprietary research on deal closing timelines, see our previous article Time Is Money: Costly Deal Delays Put M&A Arbitrage Returns In The Spotlight. I have no business relationship with any company whose stock is mentioned in this article. Namely, this is the most recent list update of merger Arbitrage Spread List September 27, 2020. The parties are working toward completing the Merger as quickly as possible and currently expect the Merger to be completed by the first half of 2021, subject to all conditions to the Merger having been satisfied or waived. Merger Arbitrage in Cash Mergers. Over the past 15 years, merger arbitrage has been competitive with bonds, with the Eurekahedge Arbitrage Index beating the Bloomberg Barclays Aggregate Bond Index by about 0.5% per year, albeit with higher volatility. I expect there is a reasonable probability that the deals described below hit my hurdle or higher, therefore you should reason that these positions are very speculative (especially relative to other mergers). Weekly Spread Changes: The table below shows weekly spread changes between December 4, 2020, and December 11, 2020. We have reported a number of times how information and announcements regarding this deal have not been forthcoming and it appears this is a similar situation. Therefore, we politely ask that you consider making a coffee donation based on your usage and benefit of the investment information provided. The IQ ARB Merger Arbitrage ETF (MNA) also declined during the week. The broader markets retreated from their recent all-time highs last week as the continued decline in the jobs markets negatively affected market sentiment. The T20 index of cash merger arbitrage spreads now offers an annualized average return of 3.71%, which is below last week's figure of 3.76%. Complementary to our merger arbitrage spread list, you can also access more FREE content using the menu bar above. U.S.-based cash merger arbitrage spreads, having previous reached a winning run stretching into double figures, … Using merger announcements and applying methods from computational linguistics we find strong evidence that stock prices underreact to information in We use cookies to enhance your experience on our website.By continuing to use our website, you are agreeing to our use of cookies. This page also includes additional help and user guidelines. Introduction Merger arbitrage is an investment strategy that invests in securities involved in mergers and acquisitions (M&A). In light of this, we made a small purchase as the stock recovered. In fact, the stock has now been either the worst or second worst performer from the index for the last four weeks. Sunday, December 30, 2018. 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