For stock catalysts, are these events that you simply predict will happen (e.g. a catalyst is X possibly acquiring Y--even if that never actually occurs in real life)? Or is a catalyst an event that will definitely occur and make the market see the true value of the stock (e.g. Q4 earnings is a catalyst)?
Thanks!
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I'd say both are true. In the context of biotechnology companies for instance, if Company ABC has phase 2b data coming up and the market is pricing in certain expectations, one way or the other that event is going to cause the stock to move, making it a catalyst.
I'm not in event-driven, but I would assume all expected value eventualities are accounted for based on the probability they will take place and the confidence interval of those assertions, which affects the level of risk a firm is willing to accept, position size, etc. Upgrades/downgrades, earnings, JVs, data releases, all that stuff can be a catalyst.
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