This is the Merger Arbitrage Spread Performance October 14, 2018 analysis. A review of the top 20 tradeable cash based merger arb spreads in the USA for the week 8th – 12th October. Included in this week’s report are the winners, losers and overall performance of the portfolio. This report is based upon the Merger Arbitrage Limited top 20 (T20) list of cash merger arbitrage spreads available as at 7th October.
Winners
The week’s best performer was EGC gaining 3.16%. Last week’s fears of significant deal extension risk were muted as the company announced only a one week delay until the deal is expected to complete. Significant gains were also recorded by NXTM and SVU which rose 1.60% and 1.44% respectively, also upon news of imminent deal closures.
Losers
This week’s worst performer, CA dropped 0.82% despite receiving regulatory approval from Japanese regulators. This is due to a purportedly fake memo from the pentagon requesting an investigation by CFIUS into the takeover by Broadcom. Completing a near perfect reversal of last week’s best performer as per the posting on 7th October, was AVA which fell 0.80%.
Other decliners of note included IDTI 0.76%, DNB 0.45% & USG 0.44%
Average
For the second week running there were 9 winners and 11 losers. However, the overall average portfolio performance for the top 20 was a gain of 0.17% in large part due to the performance of EGC whose volatility continues to dominate portfolio performance (again). This compares favourably with a drop of exactly 4.10% for the SPY.
New Entrants into the Top 20
GPT is replaced this week as the deal closed and as SVU and REIS also near completion their spreads have narrowed considerably leaving only minuscule profit available and as such they too have been replaced. The new entrants are ESL (whose deal was announced this week), NAVG & LPNT.
The most recent list of the largest spreads is already available, and you can check out the rules for inclusion here. Our free merger arbitrage spread calculator is also available for FREE download. This can be used to value the spread of any stock-for-stock deals you may be interested in.
