Research Insights

Merger Arbitrage as Diversification Strategy

By |April 14th, 2023|Event Driven Investing, Research Insights, Larry Swedroe|

Merger arbitrage is an investment style in which investors seek to buy shares of firms that are acquisition targets with the objective of realizing the difference between the amount for which the target is being acquired and the stock price of the target shortly after the acquisition is announced. The stock price of the target company typically sells below the acquisition price, reflecting the uncertainty of the deal being completed (the arbitrage spread). Betting on mergers is a classic hedge fund arbitrage strategy.

Comparing past and present inflation rates can be tricky

By |March 20th, 2023|Inflation Investing, Research Insights, Basilico and Johnsen, Academic Research Insight|

The objective of this article is to build better estimates of CPI headline and core inflation values so inflation comparisons over time are more reliable.  The run-up in inflation we are currently experiencing is difficult to contextualize because it is inconsistent with past practices, weights on expenditures have changed, and the treatment of housing costs.

Are Short Covering Trades Informative?

By |March 10th, 2023|Research Insights, Factor Investing, Larry Swedroe|

The importance of the role played by short sellers has received increasing academic attention in recent years. Short sellers help keep market prices efficient by preventing overpricing and the formation of price bubbles in financial markets. Market efficiency is important because an efficient market allocates capital efficiently. If short sellers were inhibited from expressing their views on valuations, securities prices could become overvalued and excess capital would be allocated to those firms.

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