Investing

Warren Buffett And The Activision Blizzard Merger Arbitrage Trade

Warren Buffett And The Activision Blizzard Merger Arbitrage Trade

During Berkshire Hathaway’s annual meeting last week, Warren Buffett went into a lot of detail about his position in Activision Blizzard (ATVI) to capture the arbitrage spread on the deal. This position was distinct from the position one of his managers, Ted Weschler and Todd Combs, had started before the $95 per share all cash deal with Microsoft (MSFT) was announced on January 18, 2022. Incidentally Barry Diller, his step-son Alexander ...

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Squeezing Out Extra Dividends: The Advantages and Pitfalls of Covered Calls

Squeezing Out Extra Dividends: The Advantages and Pitfalls of Covered Calls

Writing covered calls is an investment strategy that works very well for some investors, especially at a time when markets are trading sideways or declining like we are currently experiencing. A majority of options expire worthless, skewing the strategy to the benefit of those writing the options and collecting premiums. Obviously if you go too far out the risk spectrum with options, you stand the risk of blowing up as ...

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Berkshire Hathaway Paying Up For Quality: Floor & Decor

Berkshire Hathaway Paying Up For Quality: Floor & Decor

Berkshire Hathaway (BRK.A) has a long history of buying retail companies with strong operators at the helm and being willing to pay up for those companies. It was the shift away from cigar butts and cheap companies that helped Berkshire get into companies like Costco (COST) several years ago. I still recollect Berkshire paying around $80 per share for Costco despite it trading at a significant premium to other retailers. ...

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Don’t Average Down, Average Up Instead

Don’t Average Down, Average Up Instead

Investing processes are unique to each individual and investment firm. While some rely on investment checklists (I once built one with nearly 80 data points), others might rely on calculating the potential intrinsic value using a discounted cash flow (DCF) model and yet others might focus on the qualitative aspects of the business (management, industry, macro, etc.). Some investors might choose an event-driven strategy like merger arbitrage or stock spinoffs ...

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Deconstructing Form 4 Filings Filed By Company Insiders

Deconstructing Form 4 Filings Filed By Company Insiders

A question I frequently get from readers of our Insider Weekends series of articles is whether the insider purchases we are reporting are open market purchases. They are often concerned that the purchases might be insiders exercising options that were granted to them by the company or restricted stock units (RSUs) that have vested. Obviously the signal you receive from an insider exercising options is different from an insider putting ...

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Beginner’s Luck: The Role of Risk in Life and in Investing

Beginner’s Luck: The Role of Risk in Life and in Investing

When teaching an online class about the fundamentals of investing, the question of luck and specifically beginner’s luck came up. We have all seen the role luck plays, both good and bad, in our lives and our investment outcomes. “Luck is what happens when preparation meets opportunity” This is a quote often attributed to the Roman philosopher Seneca and captures some of the ingredients needed for success. Hard work is ...

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December 2021 Mid-Month Update: Doubling Down on Magnachip

December 2021 Mid-Month Update: Doubling Down on Magnachip

This is the third post in a new series that we publish mid-month for InsideArbitrage Premium and InsideArbitrage Plus subscribers. These posts will contain updates related to the model portfolio (if any) or a new quick idea. This month we are going to focus on a busted deal that looks attractive despite the deal failure. In our last mid-month article titled A Time For Caution, we highlighted the need to start scaling ...

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November 2021 Mid-Month Update: A Time For Caution

November 2021 Mid-Month Update: A Time For Caution

This is the second article in a new series of posts that we are going to publish mid-month for InsideArbitrage Premium and InsideArbitrage Plus subscribers. These posts will contain updates related to the model portfolio (if any) or a new quick idea. This month we want to highlight some concerns we have about how stretched the market appears on several metrics and steps investors could take if the winds of ...

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Announcing the Launch of InsideArbitrage Plus

Announcing the Launch of InsideArbitrage Plus

When we launched InsideArbitrage Premium more than three years ago, we got some great feedback from our subscribers and we also heard from some of you that the price was out of reach for retail investors. At launch, we covered two investment strategies (insider trading and merger arbitrage) and since then we have significantly expanded the breath and depth of the products by adding more strategies (spin-offs, buybacks, SPACs) and ...

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Special Situations Newsletter: October 2021

Special Situations Newsletter: October 2021

The market was starting to show signs of weakness early in September with all three major indices falling in unison. The excess and exuberance appear to have finally caught up with the market. The S&P 500 dropped 4.76% for the month and… Please check out the full newsletter from the attached PDF.  

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