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Buffettology mentions that Buffett did a lot of workouts in the early days.  It says Graham talks about arbitrage in Security Analysis and that he taught Buffett about the subject. 


Are there any newer arbitrage books out there that folks recommend?  The 2009 http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/merger-arbitrage/ thread mentions "Risk Arbitrage" by Guy Wyser Pratte but that book only has 1 review on amazon.


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I got interested in this area after reading the Buffet partnership letters and like you was in search of good books that would maybe do a deeper dive but it turns out there isn't much out there.


I think merger arbitrage trades, like other areas of the market, don't produce the excess returns they once did. In the past 15 or 20 years, most of the excess returns have disappeared as hedge funds have entered this area. I've looked at and done a few of these trades and found smaller transactions still provide an area of opportunity because those transactions are typically too small for most institutional investors to spend time on.


With that said, look up the Rangeley Capital podcast. I think they did an episode on merger arb 101 and also dissect merger arb ideas so you can get some sense of what's involved. If you come across any other helpful resources, please do share.

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I thought this book was pretty good - https://www.amazon.ca/Merger-Arbitrage-How-Profit-Event-Driven/dp/0470371978


But it lacks a few real world issues like Federal anti-corruption risk.


The lure of arbitrage seems to be to beat bond returns in a short period of time. Yes an investment rated bond may yield 5 or 6% leveraged up but might mature in 2-5 years. If you want to hold that long without market fluctuation risk. Conversely with arbitrage you will take deal break risk but may have a return in as little as 3-6 months. Also depending on the type of deal it will be taxed as capital gains which are in some cases lower than investment income so it may be comparable to a tax-free or zero coupon bond.

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