The Risk in Risk Arbitrage

Paulson

Paulson wrote a chapter on risk arbitrage entitled “The Risk in Risk Arbitrage.” There’s a copy here http://www.iamgroup.ca/doc_bin/The%20Risk%20in%20Risk%20Arbitrage.pdf.

GIW

GIW did something quite strange. Recall that the merger closes on April 8 or thereabouts for $9.50/share and that I managed to accumulate a pretty large position under $9.40 (not bad for two weeks). I saw it trade at $9.51 and promptly sold my entire position today thinking I was scalping someone.

I was fooled, because there’s a 3 cent dividend to be paid out on April 22, ex-div date tomorrow, so $9.53 would have been the arbitrage price. I made out okay. However, later today a large block traded at $9.55. No idea why. Maybe the div isn’t 3 cents.

TCM

TCM approved the merger with close date in April, and shares shot up as high as 4.48. Today, promptly back down to 4.36. Again, pretty confusing.

NFLX

I added a small short (~7% of equity) on NFLX at $221/sh. “Variant perception” as of right now.

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