AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

Genworth Financial Inc Cl A / Event-Driven

As Covid-19 continues to spread far and wide at a rapid pace (at least for now), merger spreads in the US have widened, and in some cases substantially. In the table below, we highlight the most 7 of the most extreme cases of merger transactions that were announced prior to February 20, 2020 when the S&amp;P 500 peaked, and where spreads have since ballooned to 40% or more in the current market meltdown. These 6 cases in our universe (AlphaSituations covers transactions in excess of $400 MN) have seen the average spread rise 12-fold from 5% as at February 20, 2020 (market peak) to 62% as of market close on March 20, 2020. All of these transactions have been targeted to complete by the end of 2Q 2020. We consider below whether the current crisis has justifiably increased transaction risk or created a profitable risk arbritrage opportunity with respect to these 10 cases listed in our table. Our assessment is that five of the six situations offer relatively low transaction risk even in the current environment, providing  a unique opportunity for outsized IRRs within a relatively short time horizon. Read on below.     4Q 2016-1Q 2020 Live US M&amp;A Announced Deals (&gt;$400 MN)  With Spreads 40% Plus<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/124/341/original/image_28184967791584975325263.png?1584975327" class="editor-image img-responsive" data-smartkarma-image-id="124341"></figure>Source: AlphaSituations

As Covid-19 continues to spread far and wide at a rapid pace (at least for now), merger spreads in the US have widened, and in some cases substantially. In the table below, we highlight the most 7 of the most extreme cases of merger transactions that were announced prior to February 20, 2020 when the S&amp;P 500 peaked, and where spreads have since ballooned to 40% or more in the current market meltdown. These 6 cases in our universe (AlphaSituations covers transactions in excess of $400 MN) have seen the average spread rise 12-fold from 5% as at February 20, 2020 (market peak) to 62% as of market close on March 20, 2020. All of these transactions have been targeted to complete by the end of 2Q 2020. We consider below whether the current crisis has justifiably increased transaction risk or created a profitable risk arbritrage opportunity with respect to these 10 cases listed in our table. Our assessment is that five of the six situations offer relatively low transaction risk even in the current environment, providing  a unique opportunity for outsized IRRs within a relatively short time horizon. Read on below.     4Q 2016-1Q 2020 Live US M&amp;A Announced Deals (&gt;$400 MN)  With Spreads 40% PlusSource: AlphaSituations

MergerTalk:Spreads Widen as Covid-19 Spreads Fear -Profitable Opportunities Or Questionable Deals?

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Key Points:<ul>
<li>The Staples Sector is leadership and many names are staging price and RS reversals.</li>
<li>REIT’s are breaking above bases and are showing RS leadership.</li>
<li>Paper &amp; Forest products are strengthening and many are reversing price and RS downtrend or breaking above bases.</li>
<li>Large-Cap Pharma stocks are showing leadership. Many have broken topside of multi-year consolidations or have reversed multi-year price and RS downtrends.</li>
</ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/059/921/original/Untitled.png?1533586859" class="editor-image img-responsive" data-smartkarma-image-id="59921"></figure>

Key Points:
The Staples Sector is leadership and many names are staging price and RS reversals.
REIT’s are breaking above bases and are showing RS leadership.
Paper &amp; Forest products are strengthening and many are reversing price and RS downtrend or breaking above bases.
Large-Cap Pharma stocks are showing leadership. Many have broken topside of multi-year consolidations or have reversed multi-year price and RS downtrends.


United States

Progenics Pharmaceuticals, Inc. is a biopharmaceutical company.  The Company develops and distributes therapeutic products to treat the unmet medical needs of patients with debilitating conditions and life-threatening diseases. Progenics' principal programs are directed toward supportive care, virology (human immunodeficiency virus and hepatitis C virus infections), and oncology.

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Progenics Pharmaceuticals (PGNX US)

MergerTalk:Spreads Widen as Covid-19 Spreads Fear -Profitable Opportunities Or Questionable Deals?

As Covid-19 continues to spread far and wide at a rapid pace (at least for now), merger spreads in the US have widened, and in some cases...

Robert Sassoon

U.S. Vital Signs: Actionable Stocks

Key Points: The Staples Sector is leadership and many names are staging price and RS reversals. REIT’s are breaking above bases and are showing RS...

Vermilion Research

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