Editing Event-driven investing

{{Short description|Hedge fund investment strategy}}
'''Event-driven investing''' or '''Event-driven trading''' is a broad term encompassing [[hedge fund]] [[investment strategy|investment strategies]] that seeks to exploit pricing inefficiencies that may occur before or after an event. Examples of such events could be an [[earnings call]], [[bankruptcy]], [[merger]], [[Takeover|acquisition]], or [[corporate spin-off|spinoff]].<ref name=":0">{{cite web |url=https://www.barclayhedge.com/research/educational-articles/hedge-fund-strategy-definition/hedge-fund-strategy-event-driven.html |title=Understanding Event-Driven Investing |publisher=Barclay Hedge |access-date=May 8, 2010}}</ref> In more recent times market practitioners have expanded this definition to include additional events such as natural disasters, regulatory changes, and actions initiated by shareholder activists.<ref>{{Cite web|url=https://mergerarbitragelimited.com/event-driven-investment-strategies/|title=Event Driven Investment Strategies - Hedge Fund Strategies|date=2019-06-26|website=Merger Arbitrage Limited|language=en-GB|access-date=2019-06-27}}</ref> However, merger arbitrage remains the best-known investment strategy within this group.<ref>{{Cite web|url=https://mergerarbitragelimited.com/event-driven-investment-strategies/|title=Event Driven Investment Strategies|last=Spink|first=Mal|website=MergerArbitrageLimited.com|date=24 February 2020 }}</ref>

This strategy was successfully utilized by [[Cornwall Capital]] and profiled in "[[The Big Short]]" by [[Michael Lewis]].

==History==
Event-driven investing "lost on average 1.4 percent in 2015" making them the poorest performers in 2015 despite a record year of mergers and acquisitions partially because funds over purchased only the largest corporate deals.<ref name="bloomberg_2015_Nov_15">{{cite web | url=https://www.bloomberg.com/news/articles/2015-11-15/event-driven-hedge-funds-were-worst-disappointment-says-k2 | title=Event-Driven Hedge Funds Are The 'Worst Disappointment,' Says K2 | publisher=Bloomberg | date=15 November 2015 | access-date=19 December 2015 | author=Hu, Bei}}</ref>

===Healthcare sector===
According to James Elliot at Alan Davis Wealth Management, about 60% of event-driven hedge funds' year-to-date gains...making it the strongest contributor by a large margin."<ref name="efinancialnews_2015">{{cite web | url=http://www.efinancialnews.com/story/2015-08-07/healthcare-injects-life-into-event-driven-hedge-funds | title=Healthcare injects life into event-driven hedge funds | publisher=Financial News | date=7 August 2015 | access-date=19 December 2015 | author=Eschenbacher, Stefanie}}</ref> According to Dealogic, by August health care mergers and acquisitions (M&A) were up 42%, with "an all-time high of $422.8 billion;" in 2014 the high was $429.3 billion for the entire year and also set a record.<ref name="efinancialnews_2015" /> New event-driven hedge funds were launched for example, New York–based Kellner had launched event-driven hedge fund, Capital with Chris Pultz and California-based Omni Partners launched event-driven investing funds such as Omni Event Fund with John Melsom as chief investment officer.<ref name="hedgeweek_2013">{{cite web | url=http://www.hedgeweek.com/2013/09/16/189994/omni-partners-launches-omni-event-fund | title=Omni Partners launches Omni Event Fund | publisher=Hedgeweek | date=16 September 2013 | access-date=19 December 2015}}</ref> Melsom noted that by 2015 there was a lot of consolidation in the healthcare sector especially in pharmaceuticals which gave "exceptionally wide spreads." President [[Barack Obama|Obama]]'s US healthcare reforms led to regulatory uncertainty in healthcare.<ref name="hedgeweek_2013" /> James Elliot's Event Fund returned 34.9% from January through June 2017, 

{{quote|"...helped gains from drug maker Valeant Pharmaceuticals' $11 billion acquisition of specialist drug maker Salix Pharmaceuticals; AbbVie’s acquisition of cancer biotech company Pharmacyclics for $21 billion; and also the decision by US pharmacy benefit manager UnitedHealth to buy rival Catamaran for $12.8 billion."|Hedgeweek August 2015}}

== Event-driven investing events ==
There are a variety of strategies that may be used to profit from different corporate events:<ref>{{Cite web |title=Event Driven Investing |url=https://www.eurekahedge.com/Research/News/1044/Event-Driven-Investing |access-date=2022-11-10 |website=www.eurekahedge.com}}</ref>

* [[Merger arbitrage|Merger Arbitrage]] (also known as risk arbitrage)<ref>{{Cite web |title=An Introduction to Merger Arbitrage |url=https://www.westchestercapitalmanagement.com/assets/files/2/an_introduction_to_merger_arbitrage.pdf |website=westchestercapitalmanagement.com}}</ref><ref>{{Cite book |last=Kirchner |first=Thomas |url=https://books.google.com/books?id=VYCYMZwFmgkC&q=%22event-driven+investing%22 |title=Merger Arbitrage: How to Profit from Event-Driven Arbitrage |date=2009-07-01 |publisher=John Wiley & Sons |isbn=978-0-470-50811-4 |language=en}}</ref> 
* Convertible Arbitrage<ref>{{Cite web |title=Event-driven investing explained |url=https://www.westchestercapitalmanagement.com/event-driven-investing |website=westchestercapitalmanagement.com}}</ref>
* [[Distressed investing]]<ref>{{Cite web |last=Jones |first=Chris |date=February 2007 |title=Event-Driven Investing |url=https://thehedgefundjournal.com/event-driven-investing/ |access-date=2022-12-06 |website=thehedgefundjournal.com |language=en-GB}}</ref>
* Spinoffs<ref name=":0" />
* Regulatory changes
* Pending investigations
* Release of financial information

==References==
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{{Hedge funds}}

{{DEFAULTSORT:Event Driven Multi-Strategy}}
[[Category:Hedge funds]]
[[Category:Stock market]]


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