Episode 23: Merger Arbitrage - Could a Regulatory Sea Change Lead to Smoother Sailing Ahead?
After a choppy start to 2023, the Arbitrage Fund finished the year with flying colors. Portfolio Managers John Orrico and Matt Osowiecki discuss what led to the rebound in the latter half of the year and why they believe the positive momentum will continue in 2024.
[Transcript]
An investor should consider the investment objectives, risks, charges, and expenses of the funds carefully before investing. The current prospectus contains this and other information about the funds. To obtain a prospectus, please visit http://arbitragefunds.com/ or call (800) 295-4485. Please read the prospectus carefully before investing. Investing involves risk, including potential loss of principal. Diversification does not guarantee against a loss.
The discussion of market trends and companies throughout this podcast are not intended as advice to any person regarding the advisability of investing in any particular security or strategy. Any securities mentioned are selected for discussion purposes only and may not represent current holdings of Water Island Capital, LLC ("Water Island") or The Arbitrage Funds. Our views, opinions, and estimates – including any forward-looking statements – are a reflection of our best judgment at the time of recording and are subject to change based on market and other conditions. Water Island is under no obligation to update or revise any such views or statements, except as required by law. Past performance is no guarantee of future results. Additional information about Water Island can be obtained from our Form ADV, which is available at adviserinfo.sec.gov. View top ten holdings. Visit the glossary for definitions of terms.
ARBNX has limited availability and may not be accessible to all investors. The fund is also available in other share classes. Please see the fund’s prospectus for more details.
Performance through 12/31/23: ARBNX (I class), 6.05% (one year), 3.16% (five year), 2.71% (ten year). Performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, visit http://arbitragefunds.com or call (800) 295-4485. Returns shown above include the reinvestment of all dividends and capital gains. Returns greater than one year are annualized. Performance varies by share class. Total Annual Fund Operating Expense for ARBNX is 1.35%. Total Annual Fund Operating Expense excluding the effect of interest, dividends on short positions, and acquired fund fees and expenses for ARBNX is 1.25%.
RISKS: Investments are subject to risk, including possible loss of principal. There can be no assurance that the fund will achieve its investment objectives. The fund uses investment techniques and strategies with risks that are different from the risks ordinarily associated with equity investments. Such risks include merger arbitrage risk (in that the proposed reorganizations in which the fund invests may be renegotiated or terminated, in which case the fund may realize losses); short sale risk; active management risk; concentration risk; high portfolio turnover risk (which may increase the fund’s brokerage costs, which would reduce performance); foreign securities risk; market risk; sector risk; derivatives risk; hedging transaction risk; counterparty risk; temporary investment/cash management risk; swap risk; options risk; liquidity risk; investment company and ETF risk; leverage risk; small and medium capitalization securities risk; and currency risk. Risks may increase volatility, increase costs, and lower performance.
Arbitrage Fund top ten holdings as of December 31, 2023: Albertsons Cos Inc; Amedisys Inc; Capri Holdings Ltd; Hess Corp; Pioneer Natural Resources Co; RPT Realty; Sovos Brands Inc; Spirit Realty Capital Inc; Splunk Inc; Water Island Event-Driven Fund. Top ten holdings represent 47.0% of the portfolio. Holdings are subject to change. Current and future holdings are subject to risk.