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Risk Arbitrage (Wiley Investment Classics)

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Originally published in 1982, Risk Arbitrage has become a classic on arbitrage strategies by the "dean of the arbitrage community." It provides an overview of risk arbitrage, how it has been used over the centuries and particularly in modern markets, with a focus on merger arbitrage. From average expected returns to turning a position, cash tender offers, exchange offers, Originally published in 1982, Risk Arbitrage has become a classic on arbitrage strategies by the "dean of the arbitrage community." It provides an overview of risk arbitrage, how it has been used over the centuries and particularly in modern markets, with a focus on merger arbitrage. From average expected returns to turning a position, cash tender offers, exchange offers, recapitalizations, spinoffs, stub situations, limited risk arbitrage, and corporate freeze-ins, the book provides a step by step walk through of a world of arb strategies illuminated by real world examples and case studies.


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Originally published in 1982, Risk Arbitrage has become a classic on arbitrage strategies by the "dean of the arbitrage community." It provides an overview of risk arbitrage, how it has been used over the centuries and particularly in modern markets, with a focus on merger arbitrage. From average expected returns to turning a position, cash tender offers, exchange offers, Originally published in 1982, Risk Arbitrage has become a classic on arbitrage strategies by the "dean of the arbitrage community." It provides an overview of risk arbitrage, how it has been used over the centuries and particularly in modern markets, with a focus on merger arbitrage. From average expected returns to turning a position, cash tender offers, exchange offers, recapitalizations, spinoffs, stub situations, limited risk arbitrage, and corporate freeze-ins, the book provides a step by step walk through of a world of arb strategies illuminated by real world examples and case studies.

30 review for Risk Arbitrage (Wiley Investment Classics)

  1. 4 out of 5

    Viktor Nilsson

    Being an experienced professional in one field, even a world-class champion like Guy Wyser-Pratte, doesn't mean you can write. This book is a painfully striking example of this. I picked it up because I'm interested in basically all aspects of trading and investing and this book had been mentioned many times by various famous investors as a great source of knowledge and inspiration. Picking books from references by professionals that I admire had always worked for me before, but this time I was Being an experienced professional in one field, even a world-class champion like Guy Wyser-Pratte, doesn't mean you can write. This book is a painfully striking example of this. I picked it up because I'm interested in basically all aspects of trading and investing and this book had been mentioned many times by various famous investors as a great source of knowledge and inspiration. Picking books from references by professionals that I admire had always worked for me before, but this time I was very disappointed. I have read at least 50 books on investing, and worked as a professional trader for over 5 years, and still I had great difficulty getting through this one. The first thing that strikes you is just how many errors there are. Glaringly ostentatious ones, such as "confidence interval" turning into "confidence internal" are mixed with errors in the math, which might be harder to notice. Worse yet, many acronyms and are left without explanations, as is the industry jargon (bride, groom, white knight, etc.). Missing are also introductions like: What is the purpose of risk arbitrage? Or what is it even? Who should engage in it? Basic tools of pedagogy, such as illustrations, are completely missing. One good thing is the plethora of case studies, investments that the author's firm undertook. These stretch from the 70's all the way to the early 00's (for later editions of the book). Each provides some background and a timeline of events. But, alas, these are also fraught with errors. Sometimes there are holes in the timeline, some sentences are grammatically incoherent. Sentences are so sloppily written that it is sometimes impossible to tell subject from object - did company A bid for company B or was it the other way around? What is it that has made this book so famous and influential then? My guess is that while there has long been many good books explaining the basics of investing, specialized strategies are rarely presented to the public. I the 70's risk arbitrage was most certainly such a strategy, a fact which is also mentioned by the author. For a few years after its original publication, Risk Arbitrage must surely have been the greatest source to learn about this practice. I highly doubt that it is today - I'm looking forward to reading later books on the subject some day. I recommend this book for any person already possessing good knowledge about risk arbitrage wanting to study its history, or just look for inspiration. As teaching material, however, reading this book will just make you frustrated and confused.

  2. 5 out of 5

    Rafael Jose Velasquez

    Interesting book with good information but not enough. A large part of the book consists of specific examples of transactions. Would likely have been better if the author systematized strategies a bit more with common ways to find good targets and how things can go well and poorly. Reads more as an almanac of risk arb deals than a synthesis for understanding the field.

  3. 5 out of 5

    Michael Smith

    Much of this is outdated but still worth your time. It’s a quick read.

  4. 5 out of 5

    Kunal

    I thought I would check out this book as Merger Arbitrage was a topic that I thought sounded “sexy” and would be interesting to learn about. As with many things, my initial expectations were very wrong after I read this book. The book is very technical as it goes through a lot of the math calculating parity which shows the underlying math used to calculate the arbitrage opportunity in these merger cases. This is not a book for the aspiring finance professionals out there or anyone just working i I thought I would check out this book as Merger Arbitrage was a topic that I thought sounded “sexy” and would be interesting to learn about. As with many things, my initial expectations were very wrong after I read this book. The book is very technical as it goes through a lot of the math calculating parity which shows the underlying math used to calculate the arbitrage opportunity in these merger cases. This is not a book for the aspiring finance professionals out there or anyone just working in the finance industry in general. Quite frankly, I see this book as only someone who is working in the M&A field or has a strong desire to work in M&A as can’t quite see where the value add is for anyone else. Having no M&A background myself, I did feel lost for a great portion of the book and skipped through most of the M&A math. The book is written by Guy P. Wyser-Pratte (born June 21, 1940 in Vichy, France) who is an American financial investor and corporate raider. He is the head of New York-based Wyser-Pratte & Co., an investment fund with some $500 million in assets under management, focused on “undervalued European equities.” The one interesting aspect about the book is that it walks through a number of M&A situations starting back in the 1960s where management would outrightly reject any tender offers for the company. Irrespective of the premium the buyer may be offering, management would instantly reject the offer as they would say “the price offered is insufficient for the shareholders”. Guy Wyser-Pratte would then file a complaint with the SEC claiming that management was not being fair as had not consulted with the shareholders nor had an idea of what the fair asking price is for the company. Back in the day, management would not want to sell the company, irrespective of the price being offered for the company. It was shortly before filing the complaint, Guy Wyser-Pratte would buy stock in the company as he is essentially taking a bet that the acquisition will eventually go through. It was interesting to hear about how he would raise his concerns at the company’s annual meeting and how even after 70% acceptance of the tender offer, management would continue to reject the offer. Looking at the history, most of the time the counter proposals came back with offers higher than the initial bidders, but sometimes the counter proposals ended up being lower which the company still accepted. Also, there were several examples of management rejecting the offer and a few months later or a year later, the stock was trading 50% or more lower than the price a year ago. Mind you, these companies were offering large premiums for some of these companies, sometimes almost as much as 60-75%. After reading about some of these examples, you begin to see why over the course of the past several years, there has been more and more of a shift to giving shareholders more control and more focus on Corporate Governance to ensure management is operating for the good of the shareholders as opposed to for themselves. Sure Corporate Raiders and Merger Arbitrage is a fascinating topic, however it being such a niche part of the market, I can honestly say this will be my first and only book that I read on the topic. As with anything though, I think it helped me realize that I have no intentions moving over to the M&A side in my career.

  5. 4 out of 5

    Yijun

    One of rare books available to teach you the techniques related to merger arbitrage, though there are unbelievably many mistakes in the book (I think they are from publisher not author) Not easy to read even for people with M&A background

  6. 5 out of 5

    Scott Albert

  7. 5 out of 5

    Ben

  8. 4 out of 5

    Philip O'Shea

  9. 4 out of 5

    Tm

  10. 5 out of 5

    Michael L

  11. 5 out of 5

    Morrow Bailey

  12. 5 out of 5

    Everett

  13. 5 out of 5

    Hugh

  14. 4 out of 5

    Karcsi Bácsi

  15. 4 out of 5

    Gary

  16. 4 out of 5

    Peterules83

  17. 4 out of 5

    Aleksandar Vichev

  18. 4 out of 5

    Satheesh Kannan

  19. 4 out of 5

    Amit Rana

  20. 5 out of 5

    Alexander Han

  21. 4 out of 5

    Abdulaziz

  22. 4 out of 5

    Kent Farrington

  23. 5 out of 5

    Anton Rozanov

  24. 4 out of 5

    SUNG SANG

  25. 4 out of 5

    Attila Rebak

  26. 4 out of 5

    Vincent

  27. 5 out of 5

    Ivan Kuznetsov

  28. 5 out of 5

    Rodrigo Maranhão

  29. 5 out of 5

    Kevin Kirksey

  30. 4 out of 5

    Mike

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