Risk arbitrage, a term arising from French origins used to denote riskless profit, is the practice of making money from the simultaneous purchase and sale of an asset in two different markets or, in the case of mergers and acquisitions, on pricing discrepancies arising from time and the probability a deal may not be consummated.  Although the arbitrage business has come along way since Benjamin Graham used it to guarantee near 20%+ profits for his partnership more than half a century ago, there are still areas where disciplined investors with sufficient capital and an understanding of deal dynamics can make very attractive gains with very little risk.

The nature of the arbitrage business is that it is ephemeral, often resulting from mergers and acquisitions activity on Wall Street (a notoriously fickle cycle known for its booms and busts).  Our preference is to engage in a handful of arbitrage deals that we understand and believe are priced attractively, provided we don’t have better uses for the capital.

Due to the economics of arbitrage, we will not disclose our positions, even if they have been closed.  This policy necessarily extends to employees and shareholders.