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Event driven managers identify securities that have a significant value gap between the market value and fundamental value. These Portfolio Managers attempt to identify specific catalysts that will unlock the value gap and only invest if a catalyst exists.
Merger/Risk Arbitrage: This strategy involves investments in mergers & acquisition situations such as leveraged buy-outs, mergers, friendly tender offers, and hostile takeovers. Generally, managers in this strategy invest after a particular situation has been announced and profit from the spread between the value offered for the target (cash or securities) and the price at which the stock of the target is available in the market. The manager's research efforts will focus on the probability of the deal being completed. In the case of a merger in which a stock swap is involved, a manager simultaneously buys stock in the target and sells the stock of the acquirer.
Distressed Securities: This strategy focuses on investing in deeply discounted debt securities of companies that are experiencing financial distress that has caused the securities to trade below their intrinsic value.
Special Situations: This strategy involves investing in the equity of a company that is experiencing some form of an extraordinary corporate event such as a restructuring, a refinancing, major litigation or regulatory change.
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