Event Driven vs. Long / Short Interview?
I've had quite a few long / short equity hedge fund interviews, but I have a couple interviews coming up with Event Driven shops.
How do these interviews differ? Are you typically asked to present an event driven idea? What's the best way to source these? Typically i do a screen for long / short ideas or read about them somewhere. Anyone have any interesting event driven ideas?
Let me know.
Thanks
What is your background?
A typical event-driven strategy is merger arbitrage. Do some research on the way fund managers manage their long/short position/risk in the targeted firm and acquiring firm.
Here's a website that provides M&A transaction announcements: http://www.theonlineinvestor.com/mergers/
Event driven is typically just merger arb, but sometimes (like John Paulson's fund) a HF will call its fund "event driven" instead of global macro to attract investors. I have friends that work in large fund of funds that won't invest in global macro because it is basically at the managers discretion where to invest the capital (equity, FI, options, futures.......)
Event driven is more than just merger arb. It also entails spin-offs, break-ups, bankruptcies, recapitalizations, tender offers, special-dividends, liquidations, etc. Basically any trade with an upcoming deadline or catalyst.
If you want to get a basic understanding of the space, I would recommend reading "You can be a stock market genius" by Joel Greenblatt. It has a lame title but is very good.
Bump... Read Greenblatt, but still tough finding event driven trades. Need some for upcoming informational interview.. Thanks in advance.
edit:
Feel as though it is still tough to find SS/event driven investment ideas... Any blogs/websites that cover this strategy? Would like to get some leads... seekingalpha is really only l/s equity and some macro stuff.
do you have access to a Bloomberg terminal??
NI SPN will bring up all headlines related to spinoffs. Make a list of 4-5 transactions, try to understand the logic behind them. Is there a segment that could trade a much higher multiple once it is broken out? Is there a reason why these businesses are even together in the first place? Better management structure once they are separate?
NI BKCY (or some variation of Bankruptcy) will bring up all headlines related to bankruptcy proceedings. Try to find something where the risks are overplayed and the debt is trading way too cheap, or in a rare case the equity holders may not be entirely wiped out (this is risky, and I doubt you will find a good example).
Best of luck.
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Great thanks. I'll use the one at my local univ.
Any other bloomberg commands for merger arb? i used it once in the summer i remember NI MNA? something of that nature..
I think it's MARB but I can't remember-don't currently have access to a terminal. I know there's a page that gives you spreads.
perfect i got it. the spinoffs is kinda hard. its just news on spinoffs and i had trouble finding ones i could do analysis on and pitch. i just used a merger arb deal.
Not an expert, but I'd recommend reading the book "Risk Arbitrage" by Guy P. Wyser-Pratte if you've got time. I read it on the recommendation of someone more experienced in the area... and it was extremely informative
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