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Based on the highest ranked content on WSO and the context provided, specific names of high-performing merger arbitrage hedge funds beyond Pentwater, HBK, and TIG weren't directly mentioned. However, the context does highlight the importance of understanding the strategies and performance factors that contribute to a hedge fund's success in merger arbitrage, such as focusing on announced deals versus pre-announced deals, the tightness of arb spreads, and the handling of deals with anti-trust issues or binary outcomes.
To identify other high-performing merger arbitrage hedge funds, one might consider looking into funds that have a strong track record in dealing with the complexities of merger arbitrage, such as those adept at navigating legal documents, understanding market climates favorable to deal-making, and managing the risks associated with pre-announced deals. Additionally, considering the insights from certified professionals and senior members within the WSO community could provide further guidance on identifying top performers in this space.
For the most current and specific recommendations on high-performing merger arbitrage hedge funds, engaging directly with the WSO forums and leveraging the collective knowledge and experiences of its members could yield valuable insights.
Sources: Merger Arb/Risk Arb?, Starting a small hedge fund, Mistake to join a Distressed HF now?, Starting a small hedge fund, From M&A to Hedge Fund
AQR's merger arb
Agree with everything stated, not much to add to that list. Maybe some pods here and there, but tight lipped community. Been a good environment as of late.
know taconic does merger arb, unsure how good they are though
Soros and I believe farallon
About how many pods are there at Soros under this strategy?
Just one guy. Soros does not have multiple PMs doing the same strategy.
what's TIG?
Glazer cap has won an award
Do you have any views on them?
Yea from the little I know about them, they seem to have produced steady easy returns. Haven’t gotten updated numbers or been too close to them since ZIRP-era so tbd if it still makes sense to put fresh money into their main fund products
Also I think Paul was big during the SPAC boom when sponsors were basically handing out free warrants to whomever was willing to let the SPAC look up money in like like a treasury account for 2 years
Thanks for the color, appreciate it. Are you close to the merger arb world or event driven? Any clue where SPACs fit into the current picture?
You are welcome. Thanks. I maybe used to be a bit closer as I was an event driven type analyst for Moelis and almost joined as the 4th/5th investment professional at a $1-2bn event driven / merger arb+ fund back during the late 10s. These days it’s mainly just buying into deals that seem to be like free money for my own PA (Och Ziff is latest to close off of the top of my head, have a few others that closed last year that I am blanking on and have maybe 1-2 more this year that I am bullish on even in this anti trust environment). SPACs are still around I understand. Gil Ottensosser at MKM now I believe is a lead banker in the space. SPACs have been around for a long time, they just got immensely hot during covid when it was like everyone and their brother was launching a SPAC. Prob would differ to experts but generally SPACs could be attractive even today. My favorite merger arb quote right now is from JPaulson “merger arb isn’t about making money but about not losing money” (maybe I’m paraphrasing him a bit), so yea can still see SPACs being good choices for big merger funds if it is still basically like locking your money up in treasuries and getting free warrants. Especially if there are SPACs trading below book value / $10/share, I could see how there may be good merger arb / event driven money to be made in the world of SPACs. I hope that helps. Good luck :)
Farallon
Aforementioned hire PMs every decade, don’t waste your time.
TIG, Glazer, HBK, Kite Lake, PSAM, Syquant, Taconic, Water Island, Kryger, AQR, Blackrock Event Driven, Gabelli, Pentwater, Alpine Associates, etc. Kite Lake, TIG, and Syquant had good years in 2023 from what I understand. Styles drift pretty heavily within the space
Would definitely not call all of these high performers… take a look at some returns from those you listed. I think GAMCO is around 1% annual over the last 10 years, but I could be wrong.
Agreed but well known players in the space. Hence why I noted 3 of them as having good 2023s.
few focused shops like TIG, Governor's Lane, Farallon and Pentwater and then pods that you'd only know if you're in the business.
How well do people get paid in M&A arb? For example, if only focusing on simple high probability deals. Curious is pay structurally lower as a result of the lower risk?
Don't work in event-driven but senior friend at Farallon shared some ridiculously high numbers
Not really sure what you’re looking for… similar fee structure to “normal” hedge funds. Will never have a 20%+ return year unlevered unless you have INSANE conviction on unsigned deals (US Steel) or get caught up in a crazy bidding war/big bump (in recent memory, EVBG bump). A shop like mine running 95%+ definitive deals, senior guys still getting paid MSD on an average year. Smallish-midsize shop. Very very few 0 bonus years in my PMs history. I think 2 years since the mid 90s where lost money. This is what a lot of people look for in arb, preservation, so more steady/expected returns. I guess you could say this means no “retire” years, where one check is sending you off into the sunset.
How big are Cit, MLP, P72 in merger arb?
They all have dedicated teams. Exposure is an accordion depending on the opportunity set.
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