March 2022 Mid-Month Update: A Trio Of Merger Arbitrage Opportunities

It is amazing how quickly things can unravel and conditions have gotten worse on multiple fronts during the last two weeks. In addition to the war in Ukraine, persistent high inflation and the specter of rising interest rates, we now have China locking down their tech and manufacturing hub, Shenzhen. The city of 17.5 million people is experiencing a lockdown just as most other countries have decided COVID-19 is endemic and something we will have to live with for an extended period of time. Uncertainty around energy prices and a rapidly deflating tech bubble muddles the macro environment further. The action on Monday where companies like 1Life Healthcare (ONEM) dropped 13.5% and our model portfolio company Doximity (DOCS) dropped 12% on no news points to rapid deleveraging among funds and retail investors. In our March 2022 Special Situations newsletter we wrote, “Scaling back exposure would be prudent. This is not a “sell everything and run for the hills” call as no one can time markets and staying completely out can have huge opportunity costs. We started working on the two ideas presented in this newsletter long before the conflict started and decided to proceed with them, albeit at smaller position...

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