Merger Arbitrage Hedge Funds
Stanley B. Block
Texas Christian University - M.J. Neeley School of Business
Journal of Applied Finance, Vol. 16, No. 1, Spring/Summer 2006
Because hedge funds tend to be market neutral, they have made it increasingly difficult for traditional portfolio managers to hide behind comparative performance matrices (such as Standard & Poor's 500 Stock Index) in times of flat or declining markets (such as 2000-2002). Of particular interest among hedge funds is the merger arbitrage hedge play. This article examines the various forms of merger arbitrage based on cash transactions and stock transactions. The important message is that by carefully assessing the likelihood and time period for consummation, appropriate returns can be earned in different types of market environments.
Number of Pages in PDF File: 9
JEL Classification: G2, G3Accepted Paper Series
Date posted: August 24, 2006
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