This is our eighth update about new merger arbitrage related positions at funds that tend to have concentrated portfolios. You can find our first update here and our Q1 2025 update here. After we published our last update and thanks to an email exchange with a subscriber, I was able to add two more funds to the list of six merger arbitrage funds I was tracking.
There are currently 85 active M&A situations in the U.S. ranging from highly risky deals like the $615 million acquisition of Cross Country Healthcare, Inc. (CCRN) by Aya Healthcare that is trading at a spread (potential profit) of over 35% to the $9 billion acquisition of Core Scientific (CORZ) by CoreWeave (CRWV) that is trading at a negative spread of almost 20%. This wild deal went from a positive spread of over 40% to a negative spread in a matter of weeks and was a new long position for one of the eight funds I am now tracking.
The Siren Call of UnitedHealth Group
One of the big stories of this 13F season, where funds report their holdings as of the last day of the prior quarter, was how funds across different investing styles, decided to start a new position in UnitedHealth Group (UNH). Everyone from Berkshire Hathaway (BRK.A) to David Tepper’s Appaloosa wanted in on the action. Even Michael Burry, of Big Short fame, couldn’t resist the siren call and decided to get exposure through call options.
One of the eight merger arbitrage funds I track decided to start a new position in UnitedHealth Group and it was interesting to see them do this through long stock exposure as well as both call options and put options.
This was the same fund that had a massive negative bet on the overall market in Q1 2025 and seems to consistently get these calls, whether they are related to merger arbitrage or otherwise, right. This is what we wrote about them in our last update:
“The largest of the six funds I am tracking had a massive $2.5 billion bet against the overall market in the form of SPDR S&P 500 ETF (SPY) put options at the end of Q1 2025 that represented almost 21% of their 13-F portfolio. Considering how things played out in April, they probably ended up locking in some excellent gains if they scaled back this position. This was not a new position for them but they doubled down on their bearish view by adding significantly to their short exposure in Q1 2025. They also had a long position in SPY but that position was scaled down in Q1 to less than 3% of the portfolio.”
New Additions
I am going to focus on some of the new merger arbitrage related additions across the eight funds I am tracking. The funds continue to use options to either protect downside or juice returns on the upside. I didn’t see as much pre-deal activity as I did in prior quarters. Pre-deal situations remain a fertile area for ideas, especially considering the latest news about Guess (GES) ending up with a $16.75 per share all cash offer that was well above the original $13 bid by WHP Global.
On a related note, we recently noticed significant insider buying in construction materials company Amrize (AMRZ), which was spun out of Swiss company Holcim in June 2025.
This just scratches the surface of the activity we saw across special situations funds, and for more ideas you can take a closer look at our curated list of 50 event-driven funds here.
If you want to stay on top of both pre-deal situations and announced deals, we offer alerts by email for new deals and rumored deals, a daily event-driven monitor that covers all activity across multiple event-driven situations and multiple tools like our merger arbitrage tool and the deals-in-the-works tool. Check out the various plans we offer here.
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