Merger Masters: Tales of Arbitrage

Heilbrunn Center for Graham & Dodd Investing Series

by Kate Welling, Mario Gabelli

Merger Masters presents revealing profiles of monumentally successful merger investors based on exclusive interviews with some of the greatest minds to practice the art of arbitrage. Michael Price, John Paulson, Paul Singer, and others offer practical perspectives on how their backgrounds in the risk-conscious world of merger arbitrage helped them make their biggest deals. They share their insights on the discipline that underlies their fortunes, whether they practice the “plain vanilla” strategy of announced deals, the aggressive strategy of activist investment, or any strategy in between on the risk spectrum.

Merger Masters delves into the human side of risk arbitrage, exploring how top practitioners deal with the behavioral aspects of generating consistent profits from risk arbitrage. The book also includes perspectives from the other side of the mergers and acquisitions divide in the form of interviews with a trio of iconic CEOs: Bill Stiritz, Peter McCausland, and Paul Montrone. All three took advantage of M&A opportunities to help build long-term returns but often found themselves at odds with the short-term focus of Wall Street and merger investors. Told in lively, accessible prose, with bonus facts and figures for transaction junkies, Merger Masters is an incomparable set of stories with plenty of unfiltered lessons from the best managers of our time.

Genres: Business, Finance, Money, Nonfiction, Entrepreneurship

410 pages, Kindle Edition

Published November 6, 2018

Reviews

[David Ball · Rating 2 out of 5]

I always have mixed feelings about books on merger arbitrage. I’ve been a merger arbitrageur for nearly 20 years, it is my profession, so I’m curious; but books on the topic make me nervous. The more people that know what I do, the more ‘crowded’ my trades could become, which reduces the profits that I can earn. Think of it as a fixed pie shared by an increasing number of people. My expectations for the book were high as Mario Gabelli is one of the deans of the industry, but overall the book is a disappointment. The introduction by Gabelli and conversations with Clint Carlson, James Dinan (York Capital), the Westchester Capital guys, and Drew Figdor of TIG all contain nuggets of insight worth reading, but the bulk of the interviews were with yesterday’s men. Men, generally, (I think there were two women profiled) who made a killing in the 1990s or earlier when the space was much less competitive and everyone involved earned exceptional returns, oftentimes illegally. Most of these players are out of the game now. We’re missing the perspectives of the current giants in the industry: hedge funds like Pentwater, Magnetar, or more systematic practitioners like CNH (AQR). How have these funds grown and thrived when most of these ‘legends’ have packed it in?

I was also particularly irked by the second appendix which runs for 67 pages and contains the terms and returns for more than a hundred randomly chosen deals since 2007. It’s obviously filler as there is no logic or purpose for the sample set chosen: it’s neither complete nor representative of the range of payouts one can expect from merger arbitrage. It just makes a 300 page book 367 pages long. To conclude, the book is dated, padded and misleading, but rather than feel resentful, I’m thankful, as it’s hard to imagine it inspiring anyone to start trading merger arbitrage if they are not already.

[Calvin · Rating 1 out of 5]

The book mostly talks about the good old days when arbitrage was a nice niche to be in. I was looking forward to the chapter on Paul Singer since that was the name I was familiar with. But it was only 15 pages long which seems awfully short for someone who has done it for so many years and is still in the business. I wished it was longer with more coverage on how they handicapped a merger or their media strategy on an activist play. It felt like a waste to have gotten access to these investors and not get into those kind of details.

[michael j. monahan · Rating 4 out of 5]

Merger Arbitrage: Profiles of the Greats

A who’s who of Merger Arbitrage. Incredible profiles. Leading off with Guy Wyser-Pratte, who basically wrote the original seminal work on Merger Arb. In-depth profiles include Martin Gruss, Paul Singer,Michael Price, John Paulson, George Kellner, Karen Finerman and Keith Moore. Also three CEO’s and their perspectives. At the end a very interesting Merger Arb decision tree of questions and about 100 deals that were done, the nuts and bolts, returns, etc. Great read.

[Aharon · Rating 3 out of 5]

What an oddity. If you cut out the duplications of people saying:

1. The UAL LBO was tough, man!
2. The Office Depot buyout was tough, man!
3. There are lots of dishonest people on Wall Street but not me, man!

you'd be down to a longish pamphlet. It reads sort of like everyone gave one one-hour interview with three questions and no followups, and editing consisted largely of punctuation placement. Still, oddity's kind of welcome in a business book.

[Ivan Kuznetsov · Rating 1 out of 5]

Not worth the time. Somewhat a self-congratulatory collection of reminiscences by some retired or semi-retired, albeit some truly legendary arbs. What was most troubling is the admission by some people of the acquaintance or dealings with Ivan Boesky and that insider dealing was a norm at a time (à la "everyone was doing it"). The checklist is partially useful albeit outdated. Deals annex is almost totally useless.

[David · Rating 5 out of 5]

Good overview with biographies and methods of some of the best merger specialists. Enjoyable read.

[Lizzie · Rating 2 out of 5]

Boy.. that was dry. They also never actually define what risk/merger arbitrage is or if there’s a difference. I’m not sure what the purpose of the book was.

[Tab Williams · Rating 2 out of 5]

I do not know why I keep reading books like this. This is more of war stories from arbs versus a how to guide. Thus it isn't very useful. The book is broken up into two parts. The first highlights 17 different arbs. The Michael Price chapter was my favorite. Part two interviews 3 different CEOs who went through a deal process. The best was Bill Stiritz.

Overall a mediocre book that is far better skimmed than read cover to cover.

[Fried Meulders · Rating 3 out of 5]

3,5/5

Some interesting titbits, but plenty of skippable biography stuff

[Steve Brock · Rating 5 out of 5]

This book was Stevo's Business Book of the Week for the week of 1/20, as selected by Stevo's Book Reviews on the Internet. You can find me at http://forums.delphiforums.com/stevo1 or search for me on Google for many more reviews and recommendations.

Merged review:

This book was a Best of the Best for the month of February, 2019, as selected by Stevo's Book Reviews on the Internet. http://forums.delphiforums.com/stevo1.... Search for me on Google for many more reviews and recommendations