Merger/Risk Arbitrage

Yes I am also curious about this one. Also (sorry if I steal your thread partially philisophical monkey), are there desks at banks like Goldman that do medium/ long term investments, like value investing? I read the description Goldman gives about their equities department, and it talked mostly about sales/ trading. However, at the end, it said: "Parts of the division are also responsible for investing the firm’s capital to generate medium-term returns from special opportunities." Is this like value investing/ arbitrage or what? Thanks.

Equities has one full prop desk: GSPS. This is group is a fundamental long short internal hedge fund. They take one maybe two each year who are the top of the sa class. They have been historically involved in the merger arb biz producing such super stars as Mindich and Rubin. The other group that trades prop MA is the multistrat area of SSG. Right now there is one guy on the Relative Value flow desk that trades MA on a prop basis but that is the extent to which there are formal MA trading groups. I think Goldman is not doing FT recruiting this year so there will be no chance of a job if you did not intern there. Lateral hires for the groups happen but are somewhat rare.

all the BB's have an equities prop desk that does some MA

I was speaking about goldman specifically

Goldman has a storied history in Risk arb. This is a really tough environment for risk arb. A lot of deals have blew up, this is a really popular strategy for a lot of hedge funds because its returns tend to be uncorrelated with equity returns. It also is a strategy that you can take very large positions in.

I dont know much about breaking into risk arb but I do know the basics of the underlying strategy itself fairly well. Again I will reiterate what a difficult market we are in right now for risk arb. People have lost a lot of money trading this strategy recently. For those interesting in a more long term fundamental strategy within equities I do recommend checking this out.

If anyone has specific questions I will try to answer, im not an expert but I do understand the basics.

"Oh - the ladies ever tell you that you look like a fucking optical illusion?"

Is merger arbitrage very quant? I don't know anything about it really, but one of my M&A directors was teaching me a bit of it the other day, sounded very interesting, but was not nearly as quant as I expected

Risk Arb is all about calculating the correct Return, Risk, and probability in order to get a expected risk adjusted return figure. The math behind it is easy requiring just basic college algebra.

The fundamentals are just about understanding different types of deals in different industries. Understanding the financing behind the deal, and how a judge may rule on antitrust issues.

"Oh - the ladies ever tell you that you look like a fucking optical illusion?"

it's all about attention to detail in merger arb. very qualitative. Not the most exciting job IMO.

this princeton girl i know who's at goldman GSPS equity prop told me the majority of what the do is fundamental equity long/short (lot of modeling and talking to mgmt).

Lots of the risk arb process is legal also. It is important to have a grasp of the legal impacts on deals. Also, this merger arb is probably down accross the board with the number of deals that blew up.

On a IB prop risk arb desk is there a complete chinese wall between banking and trading?

www.sharpeinvesting.com

Yes! are you serious? This is the epitome of a situation for which these regulations were established. prevent insider trading on news such as the health of a merger... There is always a chinese wall between banking and trading except in very rare circumstances with extremely specific qualifiers.

This thread is meaningless, use the search function.
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The musings and antics of a Meathead college wrestler turned asset backed securities trader.

Dude, and the point of your last post was ... ? Relieve unhappiness? Or boredom?