"Merger Fund (MERFX) offers a non-traditional way to invest, using merger arbitrage," says fund specialist Leonard Goodall.

The editor of No-Load Fund Portfolios explains, "Managers Green, Shannon and Behren focus on acquisitions. The success of the fund depends upon the skill of the managers to pick the mergers that will go through, along with a good measure of luck.

"They make us of the 'spread' -- buying shares in the target company after the acquisition is announced and selling those shares at a higher price when the deal is completed.

Continue reading Merger Fund (MERFX): Betting on Aquisitions

Merger Fund (MERFX): Betting on Aquisitions originally appeared on BloggingStocks on Wed, 02 Feb 2011 12:30:00 EST. Please see our terms for use of feeds.

"The Arbitrage Fund (ARBFX) invests in mergers and acquisitions by purchasing the acquired company's stock and typically shorting the acquirer; this strategy yields the 'spread' if and when the deal closes," reports Ian Wyatt.

Continue reading Investing in Mergers: The Arbitrage Fund (ARBFX)

Investing in Mergers: The Arbitrage Fund (ARBFX) originally appeared on BloggingStocks on Tue, 02 Mar 2010 10:00:00 EST. Please see our terms for use of feeds.

Family offices are quite active in the hedge fund space, according to Preqin, with the average family office in North America allocating 14% of its assets to this class.

Continue reading Six facts about hedge funds and family offices in North America

Six facts about hedge funds and family offices in North America originally appeared on BloggingStocks on Fri, 16 Oct 2009 13:40:00 EST. Please see our terms for use of feeds.

Pepsi Bottling Group (NYSE: PBG), a beverage entity that competes with Coca-Cola (NYSE: KO) and Coca-Cola Enterprises (NYSE: CCE), reported Q2 earnings on Wednesday. Adjusting for a gain related to tax issues, the company earned 78 cents per share.

According to Trey Thoelcke's earnings preview, Pepsi Bottling Group was only supposed to make about 73 cents per share. So, management managed to beat Wall Street's projections. Unfortunately, management made the same amount of per-share profit in the year-ago period, so there wasn't any growth on the bottom line.

Continue reading Pepsi Bottling Group beats earnings, but I'm not interested

Pepsi Bottling Group beats earnings, but I'm not interested originally appeared on BloggingStocks on Thu, 09 Jul 2009 08:00:00 EST. Please see our terms for use of feeds.

As can be seen, if Stifel Nicolaus turns out to be right, then traders might have a winning transaction on their hands. But one thing that must be remembered is the arbitrage game going on here. Pepsi wants to buy Pepsi Bottling Group. The latter is, of course, arguing for a higher purchase price.

Continue reading PepsiCo's upgrade -- should you buy?

PepsiCo's upgrade -- should you buy? originally appeared on BloggingStocks on Mon, 29 Jun 2009 14:10:00 EST. Please see our terms for use of feeds.

Sirius Satellite Radio (NASDAQ: SIRI) volatility at 68; Arbitrage spread tightens into FCC decision.

• SIRI is recently up $0.22 to $3.53, over 6%. SIRI and XMSR announced on 2/20/07 a merger of equals. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share.
  
• Cowen says: "We expect FCC approval before Dec. 4, the end of the FCC review period. We believe approval as early as Oct. is possible. Maintain Outperform on both XMSR & SIRI."
  
• XMSR-SIRI arbitrage premium spread is at 12%. Mel Karmazin is CEO of SIRI.
  
• XMSR December option implied volatility of 68 is above its 26-week average of 51 according to Track Data, suggesting larger price risks.

XM Satellite Radio (NASDAQ: XMSR) volatility up; Arbitrage spread tightens into FCC decision.

• XMSR is recently up $1.07 to $14.69.
  
• SIRI October option implied volatility of 71 is above its 26-week average of 53 according to Track Data, suggesting larger price risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Option update: Sirus Satellite (SIRI) and XM (XMSR) volatility up into FCC decision originally appeared on BloggingStocks on Wed, 12 Sep 2007 12:30:00 EST. Please see our terms for use of feeds.

Avaya Inc. (NYSE: AV), a corporate phone salescompany, has a bid on the table for $17.50 per share, which is expected to go through by the end of the year. If this deal does go through, shareholders stand to make a meager return of 2.3% -- nothing great.

But the story becomes more interesting when investors consider the potential for a new acquirer to step up and make an offer -- an event that is not considered unlikely amongst the "smart money." As the NY Times Deal Book is reporting, many on Wall Street are expecting Nortel Corp. (NYSE: NT) to come out and make a higher bid for Avaya.

This is an interesting derivative of my activist arbitrage strategy I discussed here on BloggingBuyouts, a sister blog of BloggingStocks. Basically, buyers of Avaya are in a very interesting win-a-little vs. win-a-lot situation. If the $17.50 offer goes through and a buyer such as Nortel doesn't step up, shareholders will make a little. But if Nortel comes in and makes a bid, or if a bidding war transpires for the company, shareholders stand to make good money -- especially considering the little risk involved.

Tails I win, heads you lose.

Avaya Situation: A dream come true originally appeared on BloggingStocks on Fri, 20 Jul 2007 13:50:00 EST. Please see our terms for use of feeds.