tl;dr
Several hedge funds, including Citadel Advisors, Adage Capital, and HBK Investments, earned substantial profits by betting on Chevron's $53 billion acquisition of Hess Corporation after a 20-month court arbitration. Hess shares, heavily held in U.S. merger arbitrage with around $10 billion invested,...
Several hedge funds have secured substantial profits after betting on Chevron's successful $53 billion acquisition of Hess Corporation. This lucrative outcome follows a 20-month court arbitration that concluded last Friday, rewarding firms specializing in merger arbitrage strategies.
Merger arbitrage involves traders placing long or short positions on companies involved in mergers or acquisitions, aiming to profit from the deal's resolution. Morgan Stanley noted that Hess shares represented the most heavily held position in U.S. merger arbitrage, with investments totaling around $10 billion.
Key players in this profitable bet included Citadel Advisors, Adage Capital, and HBK Investments. Roy Behren, co-chief investment officer at Westchester Capital, revealed his firm held about $350 million in Hess shares, expressing relief and satisfaction at the eventual outcome. He highlighted that this Hess position was their largest in 15 years, affirming the arbitration panel's decision aligned perfectly with their analysis.
According to Bloomberg's report, Citadel and HBK each held roughly $1 billion worth of Hess shares, emphasizing the magnitude of investments these hedge funds committed to the merger arbitrage opportunity. This episode underscores the potential windfalls merger arbitrageurs can reap from patiently navigating complex and lengthy merger proceedings.