Special Situations
Special situations include: mergers, spin-offs, bankruptcies, and risk arbitrage.
Otherwise, this is a somewhat ambiguous term occasionally used to describe a fund as in “Smith & Smith’s Special Situations fund”. More often used to describe one of several permissible activities for a money manager to engage in as in “Smith & Smith’s Sylvan Brook fund seeks long term capital appreciation through investing in 1) domestic equities 2) foreign equities and 3) special situations.”
Special situations investing is sometimes called “event – driven investing” or “(risk) arbitrage investing”. Note that some funds consider temporarily shorting a stock in anticipation of bad news to be a special situation.
Joel Greenblatt’s “You Can Be a Stock Market Genius” is all about special situations.
Comments
Geoff-
I recently finished "...Stock Market Genius..." (still working on thrice). Was wondering if you knew of any other texts that go through spinoffs. I didn't know your background, but I assumed that there might be material out there for MBA students in the form of textbooks, etc. that I didn't know about.
Discovered your podcasts today - and I like the thoughfulness you put into the program.
Thanks,
Sree
Posted by: Sree | February 2, 2006 11:01 AM