Merger Arbitrage Spread Performance – 21 October 2018

Without a shadow of doubt this weeks runaway star performer was EGC gaining a whopping 11.66%. This follows the successful completion of the deal at the agreed offer price of $9.10 and provides as much as a 50% return for those lucky (brave) enough to buy the stock just a few weeks ago. Significant gains were also recorded by AVA which having previously extended its forcast deal completion date held talks with the Idaho Public Utilities Commission and saw it’s stock rise 2.23% for the week. ESL which was only announced during this past week gained 0.79% on top of the announcement premium. Other notable gainers were CA and ESND which rose 0.66% and 0.63% respectively.

 

This week’s worst performer, NXTM dropped 1.18%. Shares in Fresenius dropped after announcing disappointing results putting additional pressure on them to close the deal. AFSI fell 0.56% over concerns about the financial health of the acquirer. Also falling were USG 0.47% following an earnings announcement and RCII which fell 0.35%.

 

Winners thoroughly out paced the losers this week by 14 to 6 and this is clearly reflected in the performance of the portfolio. The overall average portfolio performance for the top 20 was an impressive 0.76% largely due to the closing of EGC which single handedly contributed 0.58% of that average gain. This compares favourably with a minor increase 0.10% for the SPY.