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Warren Buffett and the Art of Stock Arbitrage: Proven Strategies for Arbitrage and Other Special Investment Situations
Give a man a fish and he eats for a day. Teach him to arbitrage, and he will eat for a lifetime' Warren Buffett Warren Buffett and the Art of the Stock Arbitrageis the first book to explore the secret world of Buffett's arbitrage and special situations investing. Long considered one of the most powerful and profitable of Buffett's investment operations, but the least understood, these special types of investments have been the edge that has made Warren Buffett the world's greatest investor. This book examines Buffett's special brand of arbitrage investing,which involves taking advantage of short term price discrepancies that often occur when one company offers to buy another companyary Buffett and David Clark, the authors of four best-selling books on Warren Buffett's investment methods, take the reader deep into the world of Buffett's arbitrage and special situation operations, giving us his strategies, his equations for determining value, and dozens of examples of his investments in this very lucrative segment of Buffett's investment operations. They offer detailed analysis and explanations of Buffett's arbitrage and special situations operations and techniques for the first time ever.
181 pages, Kindle Edition
First published October 27, 2010
35 people are currently reading
400 people want to read
About the author
Mary Buffett
48 books148 followersMary Buffett is a best-selling author, international speaker, entrepreneur, political and environmental activist. Ms. Buffett’s first book Buffettology, co-written with David Clark in 1997, was an immediate New York Times and Business Week best-seller. Since that time, all seven of Ms. Buffett’s books have been best-sellers.
Ms. Buffett appears regularly on television as one of the top finance experts in America including CNN Business News, CNBC’s Squawk Box, Power Lunch with Bill Griffith, Bloomberg News, Fox Business News, MSNBC’s Headliners and Legends and BBC News.
She has appeared around the world as a principal speaker at some of the world’s most prestigious organizations including recent appearances with Laura Bush, Colin Powell and other prominent achievers filling arenas around the country as part of the Get Motivated seminar series.
Ms. Buffett has worked successfully in a wide range of businesses including extensive work as a consultant to a number of Fortune 500 companies including AOL Time Warner, as an executive at Columbia Records and as co-founder or her own music and editorial post-production companies, Independent Sound and Superior Assembly, working with many of the music industry’s biggest stars. She has also taught Business and Finance at several California State Universities, including UCLA.
Mary is the proud mother of three successful children and lives in California.
Ms. Buffett appears regularly on television as one of the top finance experts in America including CNN Business News, CNBC’s Squawk Box, Power Lunch with Bill Griffith, Bloomberg News, Fox Business News, MSNBC’s Headliners and Legends and BBC News.
She has appeared around the world as a principal speaker at some of the world’s most prestigious organizations including recent appearances with Laura Bush, Colin Powell and other prominent achievers filling arenas around the country as part of the Get Motivated seminar series.
Ms. Buffett has worked successfully in a wide range of businesses including extensive work as a consultant to a number of Fortune 500 companies including AOL Time Warner, as an executive at Columbia Records and as co-founder or her own music and editorial post-production companies, Independent Sound and Superior Assembly, working with many of the music industry’s biggest stars. She has also taught Business and Finance at several California State Universities, including UCLA.
Mary is the proud mother of three successful children and lives in California.
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Displaying 1 - 30 of 40 reviews
January 11, 2014
The ideas are pretty general. You could probably figure the techniques out if you have some basic understanding on how the stock market works. Its just that simple. Nothing new or interesting, though I must commend the author for taking the time to give a great general view on how to arbitrage. It is definitely a good book for beginners. I would have given it a 5 star rating if the idea of arbitrage is totally new for me. For those that are already familiar with the idea, no harm spending 3 or 4 hours just to see if there are anything that you may have missed out or have not thought of.
July 15, 2025
My Slightly Sarcastic But Ultimately Honest Book Rating System:
⭐️⭐️⭐️⭐️⭐️ (5 Stars): This book achieved legendary status in my personal library. I will likely reread it until the pages fall out (or my e-reader spontaneously combusts). Consider this my enthusiastic endorsement – you should probably read it unless you actively dislike joy.
⭐️⭐️⭐️⭐️ (4 Stars): A truly excellent read! I enjoyed it immensely and would heartily recommend it to fellow bookworms. You might even catch me subtly pushing it into their hands.
⭐️⭐️⭐️ (3 Stars): Yep, it was a book I read. I turned the pages, absorbed the words, and emerged...unchanged. It was a pleasant enough journey, like a scenic detour that you wouldn't necessarily take again, but didn't regret.
⭐️⭐️ (2 Stars): This book existed. I finished it. That's about the highest praise I can offer. If you're looking for something truly captivating, maybe keep scrolling. This one's more of a "it filled the silence" kind of experience.
⭐️ (1 Star): Oh dear. This book and I did not get along. It was a literary tumbleweed in the vast desert of good books. Consider this a strong "do not recommend," unless you're conducting research on what not to do in storytelling.
Disclaimer: My enjoyment of the narrator is based on my listening speed. I only leave 5 stars for books I've read/listened to or will read/listen to multiple times. If you like this review please consider giving it a Helpful Vote below.
⭐️⭐️⭐️⭐️⭐️ (5 Stars): This book achieved legendary status in my personal library. I will likely reread it until the pages fall out (or my e-reader spontaneously combusts). Consider this my enthusiastic endorsement – you should probably read it unless you actively dislike joy.
⭐️⭐️⭐️⭐️ (4 Stars): A truly excellent read! I enjoyed it immensely and would heartily recommend it to fellow bookworms. You might even catch me subtly pushing it into their hands.
⭐️⭐️⭐️ (3 Stars): Yep, it was a book I read. I turned the pages, absorbed the words, and emerged...unchanged. It was a pleasant enough journey, like a scenic detour that you wouldn't necessarily take again, but didn't regret.
⭐️⭐️ (2 Stars): This book existed. I finished it. That's about the highest praise I can offer. If you're looking for something truly captivating, maybe keep scrolling. This one's more of a "it filled the silence" kind of experience.
⭐️ (1 Star): Oh dear. This book and I did not get along. It was a literary tumbleweed in the vast desert of good books. Consider this a strong "do not recommend," unless you're conducting research on what not to do in storytelling.
Disclaimer: My enjoyment of the narrator is based on my listening speed. I only leave 5 stars for books I've read/listened to or will read/listen to multiple times. If you like this review please consider giving it a Helpful Vote below.
June 11, 2023
Simple but some good examples of what to look at when evaluating arbitrage situations. Would mostly recommend given how short it is.
Merger arbitrage certainty to close and factoring in time value of money
Always use a yardstick to compare investments everything is about return
Reorg into mlp or royalty trust
Think about leverage in certain situations
Make sure to tender your shares through your broker
Trust don’t have to pay any taxes on profits as long as they are distruvuted to beneficiary
Things to consider in a liquadation sale
What is anticipated per-share liquidation value and time frame as well as shareholder approval and vote date
Potential profit by taking estimate liquidation value to current market price
Most important to follow the owner group as they have the most sway in approving a liquidation
Spin-offs can present opportunities if the star asset is being spun off
Merger arbitrage certainty to close and factoring in time value of money
Always use a yardstick to compare investments everything is about return
Reorg into mlp or royalty trust
Think about leverage in certain situations
Make sure to tender your shares through your broker
Trust don’t have to pay any taxes on profits as long as they are distruvuted to beneficiary
Things to consider in a liquadation sale
What is anticipated per-share liquidation value and time frame as well as shareholder approval and vote date
Potential profit by taking estimate liquidation value to current market price
Most important to follow the owner group as they have the most sway in approving a liquidation
Spin-offs can present opportunities if the star asset is being spun off
September 9, 2017
I don't a darn thing about stocks and arbitrage for that matter (doing research for a novel). This book is a beginners guide to how to make money banking on a sure thing. While I'm sure someone who has a firm handle on their portfolio and understands the market may find this book too easy of a read. I found it well written. It explained the equations in a way that was easy to digest and not get lost. If you're dipping your toes into the financial waters for the first time and want an idea on how the experts do it, this is a good start.
April 26, 2018
Short read that is an intro to special situations investing. It is probably most helpful for new investors - much of the book is simple definitions (e.g. what is merger arbitrage) and calculations (e.g. how to annualize returns). Very little in-depth discussion of Buffett's actual investments, more just name dropping. Most interesting tidbits were that Buffett achieved an 81% annualized return on arbitrage investments from 1980 to 2003, and that he was comfortable using leverage on these investments (with a borrowing limit up to 25% of partnership net assets). I would recommend Joel Greenblatt's You Can Be a Stock Market Genius instead
May 4, 2018
This book taught me to look for arbitraging opportunities during what Buffett calls "special investment situations". Leverage up on transactions before and after announcements, and always ensure high probability of "certainty".
"Warren is only interested in investing in deals that he is certain will be completed. He is not a man who plays in the gray areas of arbitrage...he leaves those to the speculators."
"Warren is only interested in investing in deals that he is certain will be completed. He is not a man who plays in the gray areas of arbitrage...he leaves those to the speculators."
December 22, 2019
A good read for those who want to understand arbitration opportunities existed in the market every day. This book tells you why Warren Buffett believed in 'Certainty' and how he could earn enormous RoI. Some easy-to-apply formulas are given that will definitely help you come to a mathematical conclusion on whether to invest in opportunity or just walk away.
December 6, 2017
Mary Buffett and David Clark have tried to explain Warren Buffet's investments in a very simplistic form in all their books. This one is focussed on his Special Situations investments - certainly providing a few important takeaways.
August 3, 2018
This book is well written in a simple way explaining arbitrage options. very easy to get concepts and then work offline.
covered arbitrage i.e
Merger
hostile takeover
reorganization to royalty trust or master limited partnership
liquidation
buy back
spin off
covered arbitrage i.e
Merger
hostile takeover
reorganization to royalty trust or master limited partnership
liquidation
buy back
spin off
November 2, 2017
Amazing. Very well explained. Very crisp presentation of concepts and methodical approach to investment. Will most likely read their other follow-on books.
August 30, 2018
Easy to read. It is a small book filled with golden nuggets for novice and experienced investors. I will be on the lookout for these opportunities and try to apply the strategies from this book.
February 24, 2019
Insightful and inciteful
April 14, 2019
Pretty basic-useless for most serious investors
October 16, 2019
not relevant to stock investment. if you are interested in buy spin off or merge company, this might be good.
April 19, 2020
Aside from the franchising of the Warren Buffett name due to its generic nature, it's a good intro into arbitrage, simple enough to interest the reader into further research.
May 16, 2020
Very basic. The most important question till the end - what is the information you need to be over 80% certain that it will happen ? It’s not an easily accessible judgement.
August 13, 2020
Stock Arbitrage is not a game. I kinda get an idea of how stock arbitrage works and its strategies.
December 14, 2024
Great intro to stock arbitrage.
December 16, 2024
I had a hard time grasping this theory of investing and don't think it's the best for people just starting out
May 19, 2025
A short book covering basic arbitrage with a focus on Berkshire Hathaway's action. Good for beginners. Not really much else to say.
November 1, 2025
I listened to it, and did not find what's different or art of wb when it comes to this topic.
February 22, 2017
Great insights! So, it turns out that Warren does use leverage. That was a surprise. Who knows what we will learn next. In any case, the book is easy to read and short; yet it comes packed with everything from Graham math to techniques for outstanding returns. Thanks to the leverage used, this book describes the not-buy-and-hold side of Buffett. In a way it feels naughty. For the expanded review see http://albertoalopez.blogspot.com/201...
April 8, 2017
This book was a quick read by only having 145 pages...
Jammed packed with formulas and situations to full one head with thoughts....
Jammed packed with formulas and situations to full one head with thoughts....
February 23, 2017
Great insights and perfect for beginners wanting to understand how to leverage and maximize annual rate of return!
Recommended!
Recommended!
February 4, 2011
Being known as America’s most famous investor means there are a lot of books about you. Biographies, profiles, “lessons from” tomes, you name it. Buffett is this generation’s most famous money man. But a new book on the subject zeros in tightly on where the Oracle of Omaha makes his biggest killings these days – stock arbitrage.
Authors Mary Buffett (Buffett’s former daughter-in-law) and (Omaha business writer) David Clark obviously have a special window in to the world of Buffett and according to them, Buffett’s use of arbitrage is the single biggest device he uses to fuel his outsized returns. In this small, 151 page book, Buffett and Clark reveal a relatively small number of methods that Buffett uses to make money on stock spreads. All of them relate to takeover activities (M&A) or various forms of corporate liquidations where Buffett sees an opportunity to make relatively quick money (six months or less) on market spreads. All his transactions are in the full light of day and require heightened levels of certainty before the investor will lay down his bet. Part of the reason for this requirement is that Buffett is often using borrowed money to make a profit on what amount to relatively small fluctuations in a stock’s price over the alloted time window. Sometimes a profit of 3% is worth going after if the time frame is small and the money is margined. This is where the ‘certainty’ factor comes into play.
The authors look at a variety of situations where arbitrage can work in the investors favor. Corporate takeovers (though Buffett prefers friendly, like industry takeovers over hostile attempts), mergers, taking companies private and liquidations are all covered here. But again, a state of certainty is essential to all deals. The book is thin, easy to comprehend and written in a way where any investor can look for the signs and follow the lead. To have an inside window to Warren’s most powerful tool is valuable enough. To have it explained in such common terms, makes this read a joy.
Authors Mary Buffett (Buffett’s former daughter-in-law) and (Omaha business writer) David Clark obviously have a special window in to the world of Buffett and according to them, Buffett’s use of arbitrage is the single biggest device he uses to fuel his outsized returns. In this small, 151 page book, Buffett and Clark reveal a relatively small number of methods that Buffett uses to make money on stock spreads. All of them relate to takeover activities (M&A) or various forms of corporate liquidations where Buffett sees an opportunity to make relatively quick money (six months or less) on market spreads. All his transactions are in the full light of day and require heightened levels of certainty before the investor will lay down his bet. Part of the reason for this requirement is that Buffett is often using borrowed money to make a profit on what amount to relatively small fluctuations in a stock’s price over the alloted time window. Sometimes a profit of 3% is worth going after if the time frame is small and the money is margined. This is where the ‘certainty’ factor comes into play.
The authors look at a variety of situations where arbitrage can work in the investors favor. Corporate takeovers (though Buffett prefers friendly, like industry takeovers over hostile attempts), mergers, taking companies private and liquidations are all covered here. But again, a state of certainty is essential to all deals. The book is thin, easy to comprehend and written in a way where any investor can look for the signs and follow the lead. To have an inside window to Warren’s most powerful tool is valuable enough. To have it explained in such common terms, makes this read a joy.
December 14, 2016
When I came across this short book earlier this year by Mary Buffett, the former daughter in law of the Oracle of Omaha, I already knew that Warren Buffett was a devoted Graham practitioner. But when the market didn't offer any bargains what did he do? I assumed that he waited patiently and did nothing. I was wrong. I learned here that he did a lot of stock arbitrage. I had not realized until reading this book, that it represented such an important portion of the returns of the partnership in the early years.
Indeed corporate activities, such as M&As, spin-offs, and liquidations can be a treasure of ideas. To illustrate why here is one example of a takeover situation. Imagine that company A declares that it will buy company B in cash at a price of X per share. Assume that you know for sure that it will happen as stated. Then, anyone selling their shares of company B at a price below X is offering you a bargain. The discount might not be huge, but if you leverage like Warren did, it could turn out profitable.
If it’s so simple why isn’t everyone successful at it? Well, there is a trick. How certain are you that the takeover will indeed happen? The key is to have certainty.
There are many situations where companies make public statements of intent for takeovers, mergers, privatizations, spinoffs, etc. But how likely are they to be all concluded? The upside on these trades are usually small in percentage terms, and the downside could be significant, especially since anyone betting on these deals uses leverage. Therefore the key is not to take any chances. Be selective. Focus on takeovers that are friendly, strategic, paid in cash, and sure to happen.
It doesn’t seem like much, but for me, it resonated with one of the teachings of Graham: don’t speculate. It takes an enormous amount of discipline to find these opportunities and a vast amount of research to reach 100% confidence. A guaranteed $1 gain is better than a speculative $10. Not everyone thinks like that.
Indeed corporate activities, such as M&As, spin-offs, and liquidations can be a treasure of ideas. To illustrate why here is one example of a takeover situation. Imagine that company A declares that it will buy company B in cash at a price of X per share. Assume that you know for sure that it will happen as stated. Then, anyone selling their shares of company B at a price below X is offering you a bargain. The discount might not be huge, but if you leverage like Warren did, it could turn out profitable.
If it’s so simple why isn’t everyone successful at it? Well, there is a trick. How certain are you that the takeover will indeed happen? The key is to have certainty.
There are many situations where companies make public statements of intent for takeovers, mergers, privatizations, spinoffs, etc. But how likely are they to be all concluded? The upside on these trades are usually small in percentage terms, and the downside could be significant, especially since anyone betting on these deals uses leverage. Therefore the key is not to take any chances. Be selective. Focus on takeovers that are friendly, strategic, paid in cash, and sure to happen.
It doesn’t seem like much, but for me, it resonated with one of the teachings of Graham: don’t speculate. It takes an enormous amount of discipline to find these opportunities and a vast amount of research to reach 100% confidence. A guaranteed $1 gain is better than a speculative $10. Not everyone thinks like that.
November 25, 2013
Warren Buffets special investment situations strategy.
Time arbitrage, not market arbitrage in this book. Calculates returns in annual terms.
Certainty of the deal. Not potential profits or speculation. A guaranteed $2 return better than a $10 spec. If deal is certain, he will use leverage to amplify returns.
Merger & Acquisitions: Does not participate in M&A when the acquirer is a buyout firm or private equity group like KKR. Prefers business buying competitors or adding to the company; especially when it’s a friendly merger.
Spinoffs, follow the corporate executives and invest in the company they go to, typically the company with better economics in the spinoff.
Stubs: too advanced.
Liquidations: too advanced.
Locking in profits:
Time arbitrage, not market arbitrage in this book. Calculates returns in annual terms.
Certainty of the deal. Not potential profits or speculation. A guaranteed $2 return better than a $10 spec. If deal is certain, he will use leverage to amplify returns.
Merger & Acquisitions: Does not participate in M&A when the acquirer is a buyout firm or private equity group like KKR. Prefers business buying competitors or adding to the company; especially when it’s a friendly merger.
Spinoffs, follow the corporate executives and invest in the company they go to, typically the company with better economics in the spinoff.
Stubs: too advanced.
Liquidations: too advanced.
Locking in profits:
October 21, 2015
This is a well written book by Mary Buffett on how she thinks her dad, Warren Buffett, handles the art of stock arbitrage. If you do read the book it is well worth the time and it is a really short piece of writing but never the less it is powerful in nature. If you have the time to devote to picking companies to invest in with arbitrage in mind it does provide some valuable insights. But then you read the disclaimer and find out Warren Buffett did not provide any details for the book and it is Mary's interpretation of how he would do this when he does indeed do it. But that really does not take away from a well written books that does provide the basic tools for someone to use arbitrage in stock purchases.
February 11, 2017
There is nothing special "Warren Buffet" thing there. It is a basic guidance book for Stock arbitrage investor explained in simple language
Displaying 1 - 30 of 40 reviews