Customer Reviews

Risk Arbitrage: An Investor's Guide

5 star:		(2)
4 star:		(4)
3 star:		(4)
2 star:		(0)
1 star:		(2)

 

 

I'm surprised this book does not receive more attention as it is apparently the first book in a long while to give a careful treatment to the alluring and ellusive business of risk arbitrage. The book's primary merit is its author's clarity --beginning with a clear anecdote to illustrate why the business is called RISK arbitrage. Then, the author helpfully dissects risk arbitrage analysis into its most practical three analytic components: rate of return, risk and probability. He offers, with careful descriptions and examples, several mathematical models to aid in the assessment of these three areas, including a model which melds all three via a risk-adjusted rate of return calculation. The author makes application of these models to cash tenders (friendly and hostile), stock for stock transactions (with and without collars), complex deals involving cash, stocks warrants, bonds etc., and he devotes an entire chapter to hostile takeovers. He discusses portfolio management at length, with handy illustrations of how might one implement the use of spreadsheets, and also discusses hedging strategies fairly carefully. It is a great introduction to an investment arena long in need of a reliable navigator.

The book would get 5 stars if not for a teaser the author doesn't address quite as thoroughly as the rest of his text dictates: he discusses hostile takeovers at length with special emphasis on several anecdotes, but he describes events as they unfold with third-party detachment...whereas I imagine most readers really want to know how each new turn might affect his analysis and computations. But this criticism is a small quibble, and the author deserves tremendous credit for clearly describing a great deal in a short amount of space.

I've been investing for many years but only began investing in arbitrage situations over the past year. I found this book much too basic based on the knowledge I've already gained just by reading various tender offers, proxies and so on. Over 100 pages of the book is two reprints, one of a tender offer document and the other of a court case decision, with a few observations thrown in throughout the reprints. If you have no arbitrage experience it may helpful.

As value investor, this book provides a good but simple understanding of what RA is. His experience in the industry is more interesting as others have noted. This book provides conceptual issues that can be applied to options, etc. WITHOUT knowing all these greek letters like delta and gamma. Arbitrage is about common sense, and if you rely on greek letters to support your decision, you will be disappointed.

Keith Moore goes in depth into the Risk Arbitrage world, with usefull and simple examples. His analysis progresses at the right speed enabling young professional to understand fundamental issues easily and with steady progress.
The experienced Risk Arbitrageur will also find in it a usefull reference guide with interesting issues discussed.

This book outlines a solid framework to assess risk arbitrage opportunities. The author describes types of transactions and the elements of return, risk, and probability to systematically analyze a deal. A number of useful formulas are included. However, a more thorough discussion on collar deals would be helpful.

By the time you are done with this book, you will hunger for greater detail on the fascinating topic of merger arbitrage. For the most part, the book glosses over in mostly limited detail the key steps in understanding merger arbitrage. The author's considerable experience has allowed him to convey a somewhat complicated topic in non-complicating language. The author could have offered a more animated and detailed walk through of previous deals, to involved the reader in the drama that often unfolds during the lifetime of deals. Anyone with some degree of financial acumen, or who is interested in perhaps starting a hedge fund, will find it an incomplete discussion, but a very worthy read along the way toward greater mastery of this subject.

Imagine a financial institution. You are a fresh graduate recruit, and you are put on the risk arbitrage desk. So the head of risk arbitrage trading takes you out for a coffee and talks about his business in very basic terms, not giving away anything (in case he decides that you don't fit into his group). So you walk away knowing what risk arbitrage is (if you haven't known already), but no more.

But then again, he might not even take you out for coffee, in which case this book will do the job just as well.

In short, this is only recommended for absolute beginners.

This book is a great text for seasoned professionals down to students of the game. A valuable reference that my colleagues and I found to be applicable to many of the deals we are currently following.

This book is a great text for seasoned professionals down to students of the game. A valuable reference that my colleagues and I found to be applicable to many of the deals we are currently following.

This book is an introduction to investing in corporate restructuring. Unfortunately, it is very flabby and poorly written, much less helpful than the insultingly titled but brilliant book by Joel Greenblatt "You can be a stock market genius." Go to pages 67-69 and you will see photocopies of price lists and stock charts taking up two full pages. This is typical of the padding that makes up too much of this book. Leave this one alone.