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2021 End of Year Review

The holidays have passed in a blink of an eye and we are back online – starting the new year with a full 2021 SSI review.

Performance – September 2021

Our tracking portfolio returned 0.2% during September 2021 and 53.5% year-to-date. A detailed performance breakdown is provided below.

Guide to Merger Arbitrage

Merger arbitrage has become a popular investment strategy used both by professional capital allocators and retail investors alike.

NAV Discount Elimination

This type of special situation revolves around holding companies or funds (e.g. closed-end) that trade at a discount to its NAV, have their assets listed on an exchange (straightforward valuation), and are easy to hedge. In essence, the idea is that a certain corporate event may eliminate the company’s discount to net asset value, however,

Capital Structure Arbitrage

When a company has more than one tradeable share class (e.g. additional nonvoting common share class or preferred shares) it is usual for a certain discount to exist among the classes. There might be various reasons for that – a voting benefit of voting shares, liquidation preference of the preferred stock, or the difference in

Mandatory Offer

In certain jurisdictions (e.g. Honk Kong, Sweden), when a buyer acquires a certain level of ownership in the company (30% in both HK and Sweden), it must make a mandatory offer for all of the remaining shares of the company. The consideration also depends on the jurisdiction, but usually is either the last price or

Bankruptcy

When the company becomes insolvent and is no longer able to repay its debt, it can file for Chapter 11 protection and proceed with a bankruptcy process. Depending on a particular case, the outcome of the bankruptcy might vary, but the most important question remains – is there any value to be left for equity

Rights Offering

Rights offering is another way of raising equity while giving the priority to current shareholders. Each shareholder is given an opportunity to acquire a certain amount of shares (e.g. 0.2 new shares for each currently held share) and to incentivize the participation, new shares are offered at a discount to the market price. Sometimes an

Educational Sources

Here you can find our recommended sources to expand your knowledge on special situation investing.

Above all, we’ve found that a very efficient way to learn is by analyzing past/already closed cases. SSI offers several hundreds of different special situations, where you can see the clear and concise picture of the whole set up, thought

Performance – August 2022

SSI tracking portfolio rebounded nicely with a +9.3% gain in August. We are now up just over 11% YTD. A detailed performance breakdown is provided below.

Performance – April 2022

Our tracking portfolio has returned +2.6% during Apr’22 and is +10% YTD. A detailed performance breakdown is provided below.

Performance – June 2021

Our tracking portfolio generated 9.5% return during June 2021 and 46% year-to-date. A detailed performance breakdown is provided below.

Performance – March 2022

Our tracking portfolio has returned +2.5% during March 2022 and is up 597% since 2017. A detailed performance breakdown is provided below.

2020 Performance Review

2020 was a very eventful year for the whole world and for the financial markets. However, as with every crisis, it provided numerous attractive investment opportunities to capitalize on.

SSI used these opportunities well and did great during 2020:

Our tracking portfolio returned +60% during the year and +323% since 2017. See full details

Performance – July 2021

Our tracking portfolio generated 1.3% return during July 2021 and 47% year-to-date. A detailed performance breakdown is provided below.

Performance – June 2022

Our tracking portfolio to a big dive of -13.3% during June’22 and is down 8.7% YTD. The monthly move was somewhat ahead of the 9.5% decline in the S&P. A detailed performance breakdown is provided below.

Tender Offer

A tender offer is announced when a company intends to buy a part of its own outstanding shares. This can be done for various reasons, such as capital return to shareholders or maybe management simply thinks that shares are very cheap at the moment. Usually, the consideration comes in cash, and to incentivize participation, the

Odd-Lot Tender Offer

When launching a tender offer the company also can opt to reduce its further administrative burden and cash out various minor shareholders. In this case, the tender offer may include an odd-lot provision. This provision means that holders of 99 shares will get accepted in the tender offer on a priority basis and won’t get

What is a SPAC?

SPAC is an acronym, short for “special purpose acquisition company”, which became extremely popular recently due to a record-breaking number of companies choosing to go public via SPAC.

A SPAC is a shell company with no operations, created in order to buy another company. So essentially, SPAC could be explained as a “bag of cash that

Reverse Split

A reverse split is announced when a company intends to reduce the number of its outstanding shares. This can be done for various reasons, for example, to nominally raise the share price and keep it above $1.00/share, which is the level required to stay listed on NYSE and NASDAQ. Reverse splits include a split ratio

Liquidation

As a special situation liquidation can come in many different forms and stages – sometimes it’s a company that is selling all of its assets and intends to distribute the proceeds ex liquidation costs to shareholders, sometimes the company only intends to sell the assets and a lot of uncertainty regarding the sale still remains.

Asset Sale

This special situation is closely related to the sum of the parts valuation of the company. There are many companies that trade at a significant discount to its SOTP and have their assets undervalued by the market. In such cases, an asset sale could become a catalyst for the share price increase as when the