Whisperer Empirical Investment Research focuses on a range of events and special situations that are significantly mispriced and misunderstood by the markets. The approach focuses on opaque, difficult-to price situations with sufficient liquidity and attractive risk/reward characteristics. Driving the research process is an examination of fundamental and market inputs in order to identify and evaluate anomalous or perceived mispricing with a rigorous and unique blended approach to equity-and-equity-derivative to credit-and-credit-derivative (cross-market) valuation processes. Whisperer Empirical takes the best of corporate finance and fundamental DCF valuation, situational and legal analysis, and combines them with a quantitative / computational finance approach to back engineering security prices and assumptions, leading to timely and accurate market-input-informed fundamental valuations.
These situations include but are not limited to:
- Capital Structure Arbitrage: CDS (or occasionally cash bond or convertible) vs. Equity / Equity options mispricings driven by capital-structure specific events or other extraneous market/regulatory factors; these are almost always spreads
- Non-traditional Merger Arbitrage (minority squeezeouts, hostile cross-border)
- Broken mergers / Bidding wars
- "Reverse" Merger Arb: traditional M&A in reverse, in which the market is pricing in a near 100% probability of deal closure which we believe would be prudent to put on in "reverse" as a hedge against market-wide or fund deleveraging events and/or situation-specific disruptions
- Spinoffs and stubs in which market frictions can be quantified and are not sufficient to explain mispricings
- ADR/GDR discounts and premiums to underlying in which profitable cross-market trades can be made
- Cross-class arbitrage
- Rights and warrants issues, secondaries
- SIBs / Dutch auctions
- Non-traditional merger securities or structured securities / royalty streams (E&P or pharma frequently) such as CVRs
- FDA approval and merger option pricing
While this is a varied range of situations, it is their unique blend of quantitative and qualitative analytical rigor and creative insight that differentiates them. |