Accelerate Arbitrage Fund

ARB,TSX,Merger arbitrage,stock price,ARB stock,ETF,hedge fund,Canadian hedge fund,ACCELERATE financial technologies,accelerate shares,accelerate,accelerate calgary,alternative investing calgary,hedge funds canada, hedge funds calgary,private equity,accelerate investing canada,accelerate investing calgary,liquid alternatives,hedge fund ETF,private equity ETF,Julian Klymochko,Jai Hawker,Michael Kesslering,Derek Euale,calgary finance,calgary hedge fund,TSX,equity index,canadian,etf,ATSX,canadian equity,hedge fund,alternative investing,Accelerate Enhanced Canadian Benchmark Alternative Fund,Accelerate Arbitrage Fund,Merger Arbitrage Fund,Merger acquisition fund,ARB,Merger Arbitrage,Arbitrage funds,arb etf,alpha arb etf,arb etf canada,accelerate arb etf,arbitrage fund,arbitrage funds in US,arbitrage funds canada,arbitrage merger fund,merger fund,arbitrage trading,dividend arbitrage,companies that use arbitrage strategy,dividend arbitrage,risk arbitrage,merger arbitrage investment strategy,The Fund,mergers,ARB,ARB ETF,What is merger arbitrage,merger arbitrage funds

About the Fund

The Accelerate Arbitrage Fund (TSX: ARB) provides exposure to SPAC arbitrage and merger arbitrage investment strategies.  The Fund aims to generate consistent, low-volatility returns by investing in listed equity, debt or derivative securities of target companies involved in mergers or corporate actions, while selling short certain listed equity, debt or derivative securities of acquiror companies involved in mergers or corporate actions, where applicable.

What is SPAC Arbitrage?

SPAC Arbitrage is an investment strategy that seeks to acquire shares or units of a special purpose acquisition company (“SPAC”) at or below its net asset value (“NAV”) in order to generate a return through either:

  • an exit at a premium to NAV once the SPAC announces a business combination
  • an exit at NAV, being the IPO price plus accrued interest, through a redemption before the deal vote or through the liquidation of the SPAC

What is Merger Arbitrage?

Merger Arbitrage is an investment strategy that capitalizes on the spread between a company’s current share price and the consideration paid for its acquisition in light of an announced merger transaction. The merger risk premium— or the spread between the acquisition price and the trading price of a stock—compensates the arbitrageur for the risk of the acquisition failing to close. The merger arbitrageur’s goal is to “lock in” the spread earned upon deal closing and to profit from buying a takeover stock at a discount to its acquisition price.

Investment Objectives:

  • Outperform the S&P Merger Arbitrage Index
  • Generate consistent, low-volatility returns
  • Provide an attractive distribution yield
QUICK FACTS

Type:
Event-driven

Structure:
Alternative ETF

Date Started:
April 7, 2020

Management Fee:
0.95%

Performance Fee:
None

Investment Manager:
Accelerate Financial Technologies Inc.

Distribution:
$0.17 per quarter

Exchange:
TSX

Currency:
CAD

Risk Rating:
Low

Historical Track Record

Investment Process

Deal Evaluation & Selection 

Accelerate uses regulatory filings, media, proprietary data screens, and sell-side analyst reports to source merger arbitrage investment opportunities. Once sourced, a deal is then placed into the merger database where the team conducts a review of the data through; press releases, merger agreements, proxy statements, and additional due diligence materials. A proprietary “AlphaRank” risk rating is then assigned to each merger transaction. Furthermore, Accelerate calculates 2 key factors in the selection process; the merger yield and the implied odds of success to determine the securities’ risk rating. If the merger yield is attractive, and exceeds the investor’s cost of capital, the team will move forward with the next step in the investment process.

Risk Management

Five key factors are considered to ensure that risks are appropriately managed:

• Does the buyer lack credibility?
• Does the financing source lack credibility?
• Is the deal non-definitive?
• What is the extent of the regulatory risk?
• Is there a buy-side vote?

Buy-side votes allow shareholders to vote against the original proposed deal in order to get a premium from a hostile interloper offering more, causing potential losses for an arbitrageur.

Position Sizing & Portfolio Management

This process aims to limit the risk of loss on a deal break to a -2% NAV decline. “AlphaRank” risk ratings are also considered when allocating position sizes. Riskier deals may represent smaller allocations in the portfolio.

Execution

Merger arbitrage is typically conducted on a company’s common shares. However, there may be other opportunities to earn a merger spread, including through a company’s preferred shares or bonds, or through derivative securities such as options or warrants. If one is trading the common shares of a target in an all-cash deal, then the trade is fairly simple: the trader places their bid for the target at the desired price and waits to get hit. If the deal includes stock consideration, the trader first has to ensure the short borrow is secured in order to short the acquiror’s stock. Once short borrow has been secured, the trader can set up the spread. To implement this type of trade, one should use a pair trader. Pair traders work by trading both legs of a merger arbitrage spread, being the target and acquiror, at the same time. The trader sets the desired merger spread into the pair trading system, based on the merger consideration, and gets filled on both legs long and short.

Deal Monitoring

After successful deal analysis, risk mitigating, position sizing, and execution, the arbitrageur goes into monitor-mode. In the case of tender offers or takeover bids, shareholders must tender shares to receive the consideration amount, whereas in mergers, a vote must be cast and the type of consideration (cash or shares) elected. Shareholder votes and regulatory approvals need to be settled prior to the deal completion.

ARB,TSX,Merger arbitrage,stock price,ARB stock,ETF,hedge fund,Canadian hedge fund,ACCELERATE financial technologies,accelerate shares,accelerate,accelerate calgary,alternative investing calgary,hedge funds canada, hedge funds calgary,private equity,accelerate investing canada,accelerate investing calgary,liquid alternatives,hedge fund ETF,private equity ETF,Julian Klymochko,Jai Hawker,Michael Kesslering,Derek Euale,calgary finance,calgary hedge fund,TSX,equity index,canadian,etf,ATSX,canadian equity,hedge fund,alternative investing,Accelerate Enhanced Canadian Benchmark Alternative Fund,Accelerate Arbitrage Fund,Merger Arbitrage Fund,Merger acquisition fund,ARB,Merger Arbitrage,Arbitrage funds,arb etf,alpha arb etf,arb etf canada,accelerate arb etf,arbitrage fund,arbitrage funds in US,arbitrage funds canada,arbitrage merger fund,merger fund,arbitrage trading,dividend arbitrage,companies that use arbitrage strategy,dividend arbitrage,risk arbitrage,merger arbitrage investment strategy,The Fund,mergers,ARB,ARB ETF,What is merger arbitrage,merger arbitrage funds

Performance as of 2021-Apr-06

Ticker 1 Month 3 Months YTD 1 Year 3 Year Since Inception
ARB -1.0% 6.7% 7.7% 39.8% n/a 39.8%
Fund Exposure
Deal Type Exposure

Fund Holdings as of 2021-Mar-31

Long Security Name Weight
Cincinnati Bell Inc 3.65%
Slack Technologies Inc 3.64%
Willis Towers Watson PLC 3.46%
7GC & Co Holdings Inc Units 3.13%
Varian Medical Systems Inc 2.74%
M3-Brigade Acquisition II Corp Units 2.33%
MedTech Acquisition Corp Units 1.85%
Vickers Vantage Corp I Units 1.75%
Cartesian Growth Corp Units 1.61%
Navistar International Corp 1.59%
Battle North Gold Corp Units 1.54%
26 Capital Acquisition Corp Units 1.45%
Monument Circle Acquisition Corp Units 1.42%
D8 Holdings Corp 1.41%
CF Acquisition Corp VIII Units 1.40%
Churchill Capital Corp II 1.38%
IG Acquisition Corp 1.37%
Avanti Acquisition Corp 1.35%
Conx Corp Units 1.34%
MCAP Acquisition Corp Units 1.29%
Executive Network Partnering Corp 1.27%
Forest Road Acquisition Corp I Units 1.25%
Lefteris Acquisition Corp Units 1.22%
HIG Acquisition Corp Units 1.22%
Empower Ltd Warrants 1.20%
Spring Valley Acquisition Corp 1.18%
CITIC Capital Acquisition Corp 1.16%
Isleworth Healthcare Acquisition Corp 1.16%
Marlin Technology Corp Units 1.14%
Roman DBDR Tech Acquisition Corp 1.14%
Property Solutions Acquisition Corp Units 1.14%
Adit EdTech Acquisition Corp Units 1.14%
Sports Entertainment Acquisition Corp Units 1.14%
Atlantic Avenue Acquisition Corp 1.14%
Anzu Special Acquisition Corp Units 1.13%
Cerberus Telecom Acquisition Corp 1.12%
Longview Acquisition Corp II Units 1.10%
KKR Acquisition Holdings I Corp Units 1.10%
Silver Spike Acquisition Corp Units 1.09%
Peridot Acquisition Corp II Units 1.09%
Lionheart Acquisition Corp II 1.01%
Delwinds Insurance Acquisition Corp Units 0.98%
Kingswood Acquisition Corp 0.97%
Viveon Health Acquisition Corp 0.96%
Supernova Partners Acquisition Co III Units 0.94%
FTAC Hera Acquisition Corp Units 0.94%
Khosla Ventures Acquisition Corp 0.94%
TCW Special Purpose Acquisition Corp Units 0.94%
Agile Growth Corp Units 0.93%
InterPrivate IV InfraTech Partners Units 0.93%
Fintech Evolution Acquisition Corp Units 0.93%
Rosecliff Acquisition Corp I Units 0.92%
Progress Acquisition Corp Units 0.89%
Sandbridge Acquisition Corp 0.87%
Thayer Ventures Acquisition Corp Units 0.86%
EdtechX Holdings Acquisition Corp 0.86%
Horizon Acquisition Corp II Units 0.85%
Supernova Partners Acquisition Co II Units 0.83%
Acies Acquisition Corp 0.83%
Arrowroot Acquisition Corp Units 0.81%
Fusion Acquisition Corp II Units 0.81%
DHB Capital Corp Units 0.80%
Twelve Seas Investment Co II Units 0.80%
Tech and Energy Transition Corp Units 0.78%
PMV Consumer Acquisition Corp 0.78%
ESM Acquisition Corp Units 0.78%
Virgin Group Acquisition Corp Units 0.78%
E.Merge Technology Acquisition Corp 0.78%
Fortress Value Acquisition Corp Units 0.78%
Archimedes Tech SPAC Partners Units 0.77%
Bluescape Opportunities Acquisition Corp 0.77%
VPC Impact Acquisition Holding Units 0.77%
Colonnade Acquisition Corp II Units 0.77%
Poema Global Holdings Corp 0.77%
Fast Acquisition Corp 0.76%
Spartacus Acquisition Corp 0.76%
FAST Acquisition Corp II Units 0.75%
Apollo Strategic Growth Capital Units 0.73%
Dragoneer Growth Opportunities Units 0.73%
Montes Archimedes Acquisition Corp Units 0.73%
Property Solutions Acquisition Corp 0.69%
Tailwind Acquisition Corp 0.68%
Recharge Acquisition Corp 0.68%
Software Acquisition Group Inc 0.68%
NextGen Acquisition Corp 0.67%
Forum Merger IV Corp Units 0.66%
Periphas Capital Partnering Corp 0.66%
Kairos Acquisition Corp 0.65%
Blue Water Acquisition Corp 0.65%
GT Gold Corp 0.65%
Amplitude Healthcare Acquisition Corp 0.63%
Atlas Crest Investment Corp 0.63%
NewHold Investment Corp 0.63%
Vector Acquisition Corp II 0.62%
European Biotech Acquisition Corp Units 0.62%
Leo Holdings Corp II Units 0.61%
Burgundy Technology Acquisition Corp 0.61%
PTK Acquisition Corp 0.61%
Broadstone Acquisition Corp 0.60%
East Resources Acquisition Corp 0.60%
Duddell Street Acquisition Corp 0.60%
Tiga Acquisition Corp Units 0.59%
KL Acquisition Corp 0.59%
New Beginnings Acquisition Corp 0.58%
ArcLight Clean Transition Corp Units 0.58%
LightJump Acquisition Corp Units 0.58%
Cascade Acquisition Corp Units 0.57%
OTR Acquisition Corp Units 0.57%
InterPrivate II Acquisition Corp Units 0.57%
Kingswood Acquisition Corp Units 0.57%
DPCM Capital Inc Units 0.57%
InterPrivate III Financial Partners Units 0.56%
Far Peak Acquisition Corp Units 0.56%
AEA-Bridges Impact Corp Units 0.56%
Zanite Acquisition Corp Units 0.55%
Northern Star Investment Corp IV Units 0.55%
Breeze Holdings Acquisition Corp 0.55%
Vistas Media Acquisition Co Inc 0.55%
TWC Tech Holdings II Corp 0.55%
Sandbridge X2 Corp Units 0.54%
Ark Global Acquisition Corp Units 0.53%
Galileo Acquisition Corp 0.52%
Edoc Acquisition Corp 0.52%
First Reserve Sustainable Growth Corp Units 0.50%
Goal Acquisitions Corp Units 0.49%
BOA Acquisition Corp Units 0.48%
Oyster Enterprises Acquisition Corp Units 0.48%
African Gold Acquisition Corp Units 0.48%
Astrea Acquisition Corp Units 0.48%
dMY Technology Group Inc IV Units 0.47%
BYTE Acquisition Corp Units 0.47%
Gores Guggenheim Inc Units 0.47%
GigCapital4 Inc Units 0.46%
Bright Lights Acquisition Corp 0.46%
Blue Water Acquisition Corp Units 0.46%
Mudrick Capital Acquisition Corp Units 0.45%
Moringa Acquisition Corp Units 0.45%
Kismet Acquisition One Corp 0.45%
Tekkorp Digital Acquisition Corp Units 0.44%
Osprey Technology Acquisition Corp Warrants 0.44%
KINS Technology Group Inc Units 0.44%
Priveterra Acquisition Corp Units 0.44%
EdtechX Holdings Acquisition Corp Units 0.43%
Better World Acquisition Corp Units 0.43%
Sports Ventures Acquisition Corp 0.40%
FTAC Olympus Acquisition Corp 0.40%
Northern Genesis Acquisition Corp Units 0.39%
Aequi Acquisition Corp Units 0.39%
Omnichannel Acquisition Corp Units 0.37%
Vector Acquisition Corp 0.37%
Artius Acquisition Inc 0.37%
Malacca Straits Acquisition Corp 0.36%
Benessere Capital Acquisition 0.36%
Churchill Capital Corp IV 0.36%
Genesis Park Acquisition Corp Units 0.35%
NavSight Holdings Inc 0.35%
Ackrell Spac Partners I Corp Units 0.34%
SC Health Corp 0.33%
Atlas Crest Investment Corp II Units 0.32%
FTAC Athena Acquisition Corp Units 0.32%
CF Acquisition Corp V Units 0.32%
CF Acquisition Corp VI Units 0.32%
Bite Acquisition Corp Units 0.32%
Pine Island Acquisition Corp 0.32%
Ascendant Digital Acquisition Corp 0.31%
Live Oak Acquisition Corp II Units 0.30%
VG Acquisition Corp 0.29%
Bright Lights Acquisition Corp Units 0.28%
Capstar Special Purpose Acquisition Corp 0.28%
KINS Technology Group Inc 0.28%
Warrior Technologies Acquisition Corp Units 0.28%
Independence Holdings Corp Units 0.27%
Seaport Global Acquisition Corp Units 0.27%
Yellowstone Acquisition Corp Units 0.27%
Alpha Healthcare Acquisition Corp 0.27%
Cohn Robbins Holdings Corp 0.27%
Mallard Acquisition Corp Units 0.26%
Jiya Acquisition Corp 0.26%
Consonance-HFW Acquisition Corp Units 0.25%
LGL Systems Acquisition Corp 0.25%
Empowerment & Inclusion Capital 0.25%
FG New America Acquisition Corp 0.24%
LMF Acquisition Opportunities Corp Units 0.23%
Motion Acquisition Corp 0.23%
L&F Acquisition Corp Units 0.23%
Seven Oaks Acquisition Corp Units 0.22%
Leo Holdings III Corp Units 0.21%
Tastemaker Acquisition Corp 0.20%
Ackrell Spac Partners I Co 0.18%
TLG Acquisition One Corp Units 0.17%
Americas Technology Acquisition Corp Units 0.17%
Yunhong International 0.16%
COVA Acquisition Corp Units 0.16%
Mason Industrial Technology Inc Units 0.16%
Adara Acquisition Corp Units 0.16%
Global Partner Acquisition Corp Units 0.16%
Athlon Acquisition Corp Units 0.16%
Biotech Acquisition Corp Units 0.16%
ABG Acquisition Corp I 0.16%
Industrial Tech Acquisitions Inc Units 0.16%
Chardan Healthcare Acquisition Corp 0.15%
ACON S2 Acquisition Corp Units 0.14%
Prime Impact Acquisition Inc Units 0.14%
Periphas Capital Partnering Corp Units 0.14%
SCVX Corp 0.13%
Union Acquisition Corp II 0.11%
Big Cypress Acquisition Corp 0.10%
Seaport Global Acquisition Corp 0.10%
New Vista Acquisition Corp Units 0.09%
DD3 Acquisition Corp II Units 0.09%
Research Alliance Corp II 0.09%
Decarbonization Plus Acquisition Corp 0.09%
Ignyte Acquisition Corp Units 0.09%
FS Development Corp II 0.09%
DFP Healthcare Acquisitions Corp 0.08%
Fusion Acquisition Corp 0.08%
CM Life Sciences II Inc Units 0.07%
Empowerment & Inclusion Capital Units 0.07%
HealthCor Catalio Acquisition Corp 0.06%
European Sust Growth Acquisition Corp Units 0.06%
Z-Work Acquisition Corp Units 0.06%
Clarim Acquisition Corp Units 0.06%
EQ Health Acquisition Corp Units 0.06%
Authentic Equity Acquisition Corp Units 0.06%
CM Life Sciences Inc 0.06%
Live Oak Mobility Acquisition Corp Units 0.06%
SilverBox Engaged Merger Corp Units 0.06%
Peridot Acquisition Corp 0.05%
Glenfarne Merger Corp Units 0.05%
Acies Acquisition Corp Warrants 0.05%
Short Security Name Weight
Aon PLC -3.70%
Salesforce -1.47%
EXPLORE OTHER INVESTMENT SOLUTIONS