Merger Arbitrage Spread List February 17, 2019
This is the Merger Arbitrage Spread List February 17, 2019. A FREE list of the largest cash merger arbitrage opportunities trading on major US exchanges. The FREE spreadsheet below contains the latest essential deal information and criteria as per official company announcements. This merger arbitrage spread list provides the user with an investable database of deal spread opportunities. This information can provide a solid foundation for making merger arbitrage investing part of your investment portfolio. We encourage traders and investors to perform their own due diligence before making investments. However, merger arbitrage (also known as risk arbitrage) is relatively simple to understand and execute.
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The Past
- There were 4 closed deals from last weeks T20 list! Aspen Insurance Holdings Limited (AHL), Mindbody (MB), Loxo Oncology (LOXO) and Athenahealth (ATHN)
- There were NO failed deals from last weeks list.
- There were no stocks to dropping out of last weeks list other than those closed deals mentioned above.
The Present
- There are no T20 replacements this week
- Ellie Mae (ELLI) was the only new cash deal announced during the week that made our list
- The largest (simple) spread this week continues to be Pacific Biosciences of California (PACB), offering a return of 12.20%. This follows a decline of $0.06 during the week. Redhat (RHT), which increased by an impressive $1.61 during the week sees its spread narrow to 4.98%. NxStage Medical (NXTM) which remained unchanged for the week sees it’s spread still the third largest at 2.39%
- The average spread for the entire T20 list is a 1.57% return. This return is higher than last week due to the closure of certain deals and the T20 list now only having 17 constituents. To maintain consistency we have instigated (in line with the rules) three parts of cash in the vacant arbitrage spaces. This brings the average spread down to 1.33%. Holding a cash position as part of the T20 portfolio also avoids the over reliance and weighting on the existing positions whose volatility may have had an outsized effect on the portfolio. The level of return continues to decrease even as we were warning spreads were already tight. Our analysis here continues to echo the sentiments of previous weeks. It is difficult to justify the level of return for the level of risk/volatility currently available in the market arbitrage space at the portfolio level. Traders are advised to take some money of the table where possible. A broader market sell off can still occur as the problems in the global political space remain unresolved.
- Speculating on the outcome of trade negotiations is not within the sphere of merger arbitrage. Even if the is a satisfactory resolution to this issue, merger arbitrage cash spreads do not have a great deal of room to run. For this reason we continue to advise taking profits when possible and be ready to take advantage of any pullback should it occur.
- Always be careful using leverage in these situations and maintain at least some dry power for future opportunities.
The Future
- Travelport (TVPT) reports earnings before the open on Friday
- There are no dividend payments expected during the coming week
- Any deal announcements relating to this weeks T20 list will be announced in real time, most often via out twitter feed @MergeArbLimited.
