Whatever happened to Jeffrey? He’s been MIA from this thread a while
My public company was just bought by a private one for an agreed upon share price. My company is trading about a $1.50 discount to the agreed upon sale price. Perhaps I will become a merger arbitrager.
I spent a summer in college (1995) working in the back office of a family office that primarily invested in M&A risk arb. I never figured out exactly how they did it - I wish I had spoken up and asked a lot more questions as I got the job through a family friend who was their head trader. He made silly amounts of money, so clearly it worked. Unrelated, I remember very clearly near the end of the summer that one of the traders, unrelated to their primary risk arb focus, was very excited that he got an allocation of the Netscape IPO.
From what I understand, the deal is cash and each shareholder at the time of the final sale will receive x dollars for their share. It’s trading at a 2ish % discount to that buy price. It will probably take 6 months to get through regulatory approvals and shareholder votes but this seems more a go than other deals. With the way the market is going, I’m not sure a 2ish% return is worth the hold but it’s an interesting scenario.
Right, so you are weighing the risk of the deal not closing in that 6 months. The question in this case is what is your relative/comparable investment? One might argue a money market account getting 0.5%. So, if you had $1 million to put into it, you would be looking at earning a "risky" 10k versus the less risky* 2.5k over those 6 months. Another alternative investment might be commercial paper. Those rates are under 0.1%. So you can quickly see that this scenario becomes a thing for large pools of money trying to eke out whatever yield they can.
The stock scenarios can be much more complicated and then you have market risk along with the individual stocks/companies, etc. There you might try to go short the acquirer and long the acquiree and take advantage of that differential. As I mentioned I tried to dabble in this stuff in the 90s with bank mergers. I quickly learned I was a hobbyist and this sort of thing was outside my wheelhouse. So, take this all with a grain of salt as I was really only an interested observer, I lacked the scale and access that professionals have to make some of these things work.
*less risky because MMAs are only insured to $250k
So far...so good. About 35% gains on five figures+ invested. Who wouldn’t be happy with that?
I’m expecting a substantial pullback at some point soon to test my confidence in all this. My friends who have been investing in crypto for a while, and have done really well, say it goes with the territory. I just have to stay steady through all the volatility and stick to my 3-5 year plan. I’ve only been in about 3 months.
I have been steadily buying Ethereum, and also some more Chainlink. I believe in what they are building and still think there is lots of room to grow. I wish I could to buy more Bitcoin, but I’m pretty disciplined with what I can afford to lose, so I’m putting what I can where I think/hope is the best chance for real growth and that’s ETH and Link.
I wouldn’t touch anything like Dogecoin or these other speculative coins that can’t show me they provide a better way or a better solution to a problem. Having a cool meme is not a good enough reason for me to invest, but seems to be enough for a lot of people. Crazy stuff going on out there in the cryptoverse...
As a rookie investor with very little skin in the game. The Dogecoin... (Fad? Phenomenon? Situation?) is rather infuriating to me, as it seems to buck all the establishment rules. I made a few dollars by buying on dips and selling on upticks, but it seems to me to be testament to idiots in large numbers.
Part of me wants them to fail so I can say "see? You have to follow the rules like everyone else." Part of me wants to see it shoot the moon and become a fairy tale.
We ascribe value (formally or temporarily) to a lot of things with no actual utility. Paper currency is useless. Gold doesn’t have much utility. Baseball cards are scarce collectibles. Beanie babies had their day in the sun.
Dogecoins are like beanie babies to me. The point is to not be holding them long after the run is over and you’re stuck with a closet full of stuffed animals no one cares about anymore. They’re useless but it’s still a market because people believe in the crypto gold rush. I put the 50 shares of Lehman Stock I bought near the end convinced of intervention in that convo. 😂
Last edited by bundabergdevil; 05-08-2021 at 08:29 AM.
Check out this recent record shareholder vote --- DuPont got crushed with 80% of shareholders voting in favor of plastic pollution and D&I resolutions.
As recently as 8-9 years ago, corporate IR essentially considered these types of resolutions nuisances because they seldom commanded more than 10-15% of the vote if that. Today, companies are starting to not only lose but get crushed. Regardless of how I feel about the actual resolution content, I am somewhat gratified because I made the case the day was coming to two previous employers and that we should prepare accordingly. In fairness, the company's did but the pace of social change and investor expectation has shifted dramatically the past few years on certain issues.
That’s really interesting. At 80% for a big company like DuPont, that’s not just a few activists supporting it but also some big institutional investors who are normally only concerned with squeezing every penny of return out of their holdings.
And this obviously isn’t so they can get DuPont into an ESG fund as I don’t think that will ever happen.
Originally, the ESG activism was confined to values-based investments whether that was a catholic pension fund screening out guns, porn and liquor or another ethical/value system.
The big boys are starting to develop their own investment vehicles because the market for such products is growing and there is defensible research that suggests companies with strong ESG management practices outperform their peers without them. So, it’s just another investment thesis.
But, the bigger conversation is about expanding the scope of what constitutes material information for investors. The long-term, passively managed money increasingly believes ESG info is material and that companies out of step with certain social and environmental changes are at risk.
Four or five years ago I started staffing calls with IR because Blackrock, State Street, CalPers and others were bringing ESG analysts to the reviews and asking questions. Up to that point, I had only interacted with the SRIs. I can tell you that IR was shocked the first time State Street told them that they would be voting against management’s recommendation on one of these proposals.
I’m still surprised by the DuPont vote. That is overwhelming and history making.