Mergers have been frothy these past few, well, decades, yet alpha from the merger arb strategy remains elusive. Novus tracks 10 firms that invest in stocks of both parties to a merger, and only two of them have positive alpha over the past three years -- and frankly not positive by much. Lesson to be learned: Merger arb is really, really hard.
It's telling that Manikay Partners, leading the field with a whelming 459.22 annualized basis points, has been moribund since the start of the Covid-19 pandemic. Chesapeake Partners Management, the other marginal winner, shut down even before that.