Merger and acquisition arbitrage

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I talked about arbitrage quite a bit in my blog, but in terms of profit I didn’t make much until year 2022 – I followed Warren Buffett and bought into Microsoft Activision Blizzard acquisition. I got this idea when I attended #BRK2022 shareholder meeting in Omaha, Nebraska.

Most recently, I speculated a few more, one with the intension of arbitrage (Reddit $HCP – HashiCorp is weighing up a potential sale – Bloomberg Business); another one I just stepped on it purely by accident ($BSY). I know in many days, I stepped on the wrong thing (or stock), but this time with #BentleySystems, things are looking good 🙂

Today the Hashicorp news became official – CNBC: HashiCorp shares spike on report that IBM is in talks to buy the cloud software maker.

Note for Hashicorp, I was interested in its technology for a while, as you can read or glance through the below posts I made over the years.

My year 2015 post on Vault, the Hashicorp product for key and secrets
My year 2016 post on Hashicorp products, vagrant is somewhat like a VM, Consul is for service discovery (think service mesh)
My year 2020 post on Terraform, note TF is probably Hashicorp cash cow, and also important for cloud infrastructure life cycle management

Note in the years since 2015, essentially since year 2019, I thought about learning the #golang myself and apply for a job (likely dev) at Hashicorp. That didn’t materialize like many initiatives I had over the years. Also note in year 2020/21 while at Ascension health I did use the Terraform quite a bit for the GCP infrastructure automation. My main motivations to join them are two folds: 1) I was interested in Dev Ops and cloud infrastructure; 2) I recall if I join a startup when they have 200 people (or engineers), potentially I would make enough money from stocks so that I can retire early.

For $BSY, I heard about them for a while, but until recently I didn’t have chance to look at their financials (until they came to the public market a dew years ago)

My Jan 2024 post on $BSY

Last but not least, as the old Chinese saying goes, 胜不骄败不馁,what I need to do: is continue this battle on the stocks, and hopefully I will come away with more winners compared to losers (recently losers include $DT, $LEG Leggett & Platt which I talked about here, and $RIVN).

PS: years ago, to be more exact, about 19 years ago, I tried this #arbitrage investing approach too. I was not successful. I recall in year 2005, I tried to buy an oil company Unocal which was bided both by the US oil giant Chevon and Chinese oil upstart CNOOC. That one didn’t work out and my speculation failed.

Later there is the acquisition of Anheuser-Busch by InBev. I didn’t participate either, but I recall Warren Buffett and Berkshire Hathaway was successful on arbitrage.

PS (04-27-2024) I sold all my $HCP long position at $33 on Thursday 4/25, and now I think if it drops to $31.50 ($10% discount of IBM $35 offer price), I can make some money there – assume the deal doesn’t collapse, and I think almost risk free arbitrage from $31.50 to about $34. Along those thinking, I placed a limited “good until cancel” buy order of $31.50 🙂

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