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My Merger Arbitrage Journal

  1. Hi guys,

    I would like to share my merger arbitrage journal here in elitetrader. My objective in this journal is to track as well as share my trades with forumers who are interested in merger arbitrage. It seemed like there are very few merger arbitrage investors around here so I would like to get the ball rolling as well as make some new friends here...Here's current holdings so far:

    1. Monsanto
    2. Time Warner
    3. Bunge Ltd
    4. Short BIVV Puts
    5. Short JUNO Puts
    6. Short AKRX Puts
  2. My biggest position currently is Monsanto. Monsanto just got approved by CADE Brazil so what's left are EU, DOJ and MOFCOM for the big 3 approvals plus other countries. I am highly confident Bayer's merger with Monsanto will get approved by Jun 2018.
  3. Arbitrage requires both a long and a short.
  4. For cash deals like Monsanto, is it necessary to add a short of Bayer?
  5. I'm not a professional but I prefer to just take the long side of a cash deal.
  6. if its a cash deal, there is no short side

    arb 101

    beware statements made by anyone with less than 1875 posts
  7. :thumbsup::sneaky::sneaky:
  8. That is spec, not arb.
  9. Ignore bobby. He doesn't know what he's talking about.
  10. Looking forward to more posts. I've done some merger arbitrage but no current trades. Do you only take bullish positions?

    I had missed the JUNO announcement. Do you have a good source for announced mergers?
  11. ok big man, if theres a cash offer, why would you short the buyer?
  12. I usually depends on twitter, blogs, news, regulatory websites... for example, CADE provides public access to opinions submitted by market participants in the merger register for Bayer/Monsanto so you can really get an idea whether the merger will get approved or not... last year i participated in ChemChina/Syngenta merger arb and got most of my info from CADE... really huge discount to merger price in Dec 2016 but reading comments from CADE gave me confidence to go all in...

    News reports on rumors about JUNO on the week before announcement was all over twitter and after reading up abit on the rationale of Celgene buying JUNO, i decided to take the plunge..buying shares first then selling near $86..then selling puts...

    Now CADE had approved Bayer/Monsanto and with the market correction recently..i m closing my JUNO and BIVV short puts to free up more margin for Monsanto...
  13. I usually take bullish positions...in fact last year all my merger arbs were bullish... participated in 21 different merger arbs, won 16 lost 5...

    Most of my profits came from 3 concentrated high conviction positions...would like to diversify but its hard...

  14. looking forward to sharing and discussing with you on mergers!
  15. What were your three?

    I earned on syt, mon and nxpi.
  16. By Cade, you mean the Brazil anti-trust authority? They aren't the relevant agency though. It's the US as they are the ones who are nixing deals, especially in the semiconductor space.
  17. Mine were SYT, CAB, BRCD

  18. For agri-chem/agri deals, they are one of the biggest... I believe the sector is split into 4 big regions - North America, EU, South America, Asia... Brazil is a large part of S.A.

    CADE is the easiest and earliest of the big regulators to pass. EU and DOJ are more problematic...they usually demand more concessions on top of those offered.... MOFCOM will wait for EU and DOJ before approving..usually the last...

    I used CADE because all other regulatory documents are not really accessible by the public. From CADE, we can see alot of info like comments on questions regulators posed to the types of products each competitor have...
  19. I ultimately lost on cab. I got whipped around.
  20. Thank you for that insight. I will check it out.
  21. I was in NXPI early..sold too early with too little stake
  22. any insights about Bunge? I hope ADM can succeed and Bunge will not be too greedy... ADM wanted to expand in South America and Asia and Bunge can give them that...
  23. If the buyer collapses, the cash deal won't consummate. Not hard to understand.
  24. Closed out my JUNO short puts to increase my portfolio margin... some movement in BIVV put options priced me out of closing... curiously JUNO $30 Mar 18 Puts are didn't spike up in price but BIVV $100 Jul 18 Puts spiked from $1.20 to $1.75 yesterday with underlying little changed... volatility spike?

    Market was up big but my merger arb stocks didn't respond sadly... wanted to buy more Monsanto.
  25. i closed all my JUNO and BIVV short puts options to concentrate on MON... Now left with Mar $30 short AKRX puts, MON, TWX and BG. A little bit worried about BG as there is still no indication if the negotiations are successful for a merger but my position is not very big.
  26. closed out BG with a loss as well.. with the bad results and conference call by BG, sounds like they are not trying to sell the entire company.