67 WALL STREET, New York - June 25, 2014 - The Wall Street Transcript has just published its Investing Strategies Report. This special feature contains expert industry commentary through in-depth interviews with highly experienced Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Reactionary Investing - High-Quality Companies - Investing in Special Situations - Secular Growth Themes - Large-Cap, Deep-Value - Defensive Growth Approach - Long-Term Investing - Event-Driven Investment Opportunities
Companies include: CapitalSource Inc (CSC), UNS Energy Corporation (UNS), T-Mobile US, Inc. (TMUS), and many others.
In the following excerpt from the Investing Strategies Report, an expert analyst and professional portfolio manager discusses his investing methodogy and current top picks for investors:
TWST: How does your sleeve interface with the fund's overall structure and strategy?
Mr. Drippe: We think of the event-driven side of the fund as premerger arbitrage, and the arbitrage part of the fund, or the merger arbitrage sleeve, as post-announcement.
On the merger arbitrage sleeve, what I'm attempting to do is be involved in announced transactions, so everything I'm involved in is announced. That could mean it's a hostile transaction, that could mean it's a definitive agreement, that could mean it's companies that put themselves up for sale. But everything that we're involved in is something that has been announced, and I'm looking at the risk/reward of the transaction potentially being completed, versus the losses if it's not completed. I'm trying to put together a portfolio that I think on a risk-adjusted basis, given a high probability of success and the positions I'm involved in, will generate a mid-single-digits rate of return.
TWST: Where does the process begin in terms of creating the portfolio?
Mr. Drippe: From a macro perspective, we figure out how much capital we want to allocate to event driven and how much we want to allocate to the merger arbitrage. So at the moment our capital allocation is split between the two, by 75% event driven and 25% merger arbitrage. And that could vary over time, but at the moment we think there are more exciting opportunities for profit generation in the event-driven sleeve than the merger arbitrage. But we want to have a component of merger arbitrage, because we think it provides noncorrelated return to the market and lowers the overall volatility of the fund.
TWST: What is the difference between transformative merger arbitrage versus "just" merger arbitrage?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.