You know, i think most of you would agree with me. We don't have a lot of certainty in our life, coveted wars, the craziness of the stock market. You know we plan, god laughs and all that you know besides death and taxes, there's just not a lot of certainty in our life, especially in the stock market, now hold on a second, unless you're going to use risk arbitrage now. Risk arbitrage is a very interesting strategy which is being used every single day by hedge funds and professional investors, and i'm going to show you how you can use this strategy today with a specific case where you can apply it and make about four percent.

In a few weeks at very low risk now i know i know it's not lambo money, you're, not gon na, be able to buy a mansion of a four percent, but it's nice to have, especially in this insane market. Now look. The market has completely shifted. We went from this insanity of 2020 even 2021 into this barren land, we're.

Basically, you know growing our own tomatoes. You know hunting for food screaming into our screaming bags, trying to figure out what the hell is going on in this market. Four percent. In a few weeks, at a low risk sounds just about right, so let me show you now the strategy i want to show you in this video is a strategy.

That's very common in the financial industry, hedge funds, professional investors use it every day, but retail investors don't really get exposed to it too much and kind of that's the purpose of this channel in general to democratize this information for you. So here it is, i'm not going to put this on my patreon, so this is for everybody to use. Essentially, this strategy is where you actually look forward to a specific event happening, and if that event happens, then you make the money, regardless of how good or bad the market performs, the market can be read. The market can be green, it doesn't matter as long as the event that you're looking at actually materializes actually happens now in m a merges and acquisitions.

That event is called the closing of the deal. As you may have heard, the twitter board of directors agreed to the terms of the deal that was proposed by elon musk. That doesn't mean that the deal is actually going to happen. There's no 100 certainty that the deal will go through.

This is a really good sign, but there's still things that need to happen in the meantime, for the deal to close until the deal closes, there's still a certain level of uncertainty. Now that uncertainty is being priced in the stock market. If you look at the price right now, the stock it's about 52, while elon musk is offering 54.20 cents per share, so there's arbitrage. This little gap is called the risk arbitrage.

This is the gap that represents the chance that this deal is not gon na go through and, as you can see, two dollars and twenty cents is not a lot of arbitrage. I mean it's a very tiny arbitrage but, as we say in russia, you know it's not about the size. It's about how you use it so anyways. This little four percent is actually, in my view, very, very likely to materialize and i'd happily take four percent in a couple of weeks and i'll show you how you can do it as well, but again this isn't financial advice.

You, of course, have to talk to a professional financial advisor, i'm just a guy on the internet. Talking about stuff make sure you talk to a professional before you make any actual investment decisions. You know, it's kind of you know, do your own research kind of thing. So let's talk about this right now we have a situation where the deal might happen might not happen.

If that happens, this gap will close and you'll make your four percent. If it doesn't happen, i got ta be fair with you. The stock price is likely to drop to where it was before. Elon musk started buying twitter shares, which is probably around the 35 area, maybe 30, maybe even less so.

The downside here is about 50 at the worst case scenario. So if this thing actually fails, you might lose about fifty percent. If it succeeds, you make four percent, but this is what happens when you talk about high probability events, because, as i'm about to show you in this video, the probability of this deal actually closing is very, very high in my opinion, which of course might be inaccurate. Might be completely wrong, my ramblings of madman, you know you got ta, do your own research, but let me show you why i think this deal is closing and why this gap will close giving about four percent in a couple of weeks.

Now before i do, i have to explain that this isn't about catching the deal before it's announced. There are people who hunt for these who look at companies that can be potentially targets for hostile takeover or m a, and they bet on this. In this case, you can make you know 30. 40.

50. In a couple of days, if you bet on the right company, this isn't it. This is basically a small little analysis on this gap of the deal going from agreement to actual closing. So there's not a lot of money to be made here, but the certainty of it is quite high.

Now, of course, if you have actual insider information about what's going on in twitter or elon musk or anybody who has anything to do with this deal, stay the away do not use inside information. This is just using public information, your brain and your analytical skills. That's it anything beyond that is illegal, and i don't suggest you try that. So how big are the risks of this deal? Actually not closing in normal deal? There's a lot of risks.

Regulatory risk, tax risks, financing risks, there's a lot of stuff that can happen. That can actually make a deal go kaboom, not very often, but sometimes that happens, and this deal it's very unlikely and i'm going to show you why. First of all, this is a straight up. Cash deal, there's no dividends, there's nothing in between there's nothing.

It's a straight up: cash and elon already secured the financing he filed. He submitted, he has financing, so this deal is financed and it's just cash. The financing risk here is literally very close to zero. So that's one check mark of a risk that is not very high now.

The second is whether this is a hostile takeover in hostile takeovers. You know the board fights and this is quite risky, but, unlike what you'd think this is no longer a hostile takeover. That part is over once the board of directors enacted the poison pill, that was a hostile takeover environment, but it's no longer the case. The board sat down with elon and they agreed on a deal.

That's actually happening, it's no longer a hostile environment. The twitter board is now working jointly with elon to make this deal happen, so any hostilities are now gone and it's in the both interests of both parties to get this deal done. So that part is again another check mark for very low risk. Now the third risk is probably the biggest in these sort of deals, and you saw this with nvidia just about a year ago, regulatory risk regulators, don't like monopolies and overly powerful competitors.

For example, if facebook would have tried to buy twitter, the regulators, the ftc, would have come in and said hey. This is not good. Antitrust would not allow this you're going to become a monopoly. We're going to actually disallow this deal from happening, even though the parties agree, so the main regulatory risk is for the ftc to come in and say this is just too powerful.

Now, in this case, we've got an individual elon musk who's buying a company, there's no real regulator, risk, definitely not anti-trust risk. Now elon owns tesla and spacex, but they're in completely different industries that have nothing to do with twitter. If he was involved with facebook or instagram or whatever the it is right, this would have been a whole different situation, but because he's completely separated from the world of twitter there's no real regulatory risk here as well. But you know with regulators, you never know so we're going to put it as low probability.

Now, let's talk about the shareholder vote. Don't forget that the fact is. The board did agree for this, but until the shareholders actually vote, there's not going to be a deal. So this whole deal is subject and pending shareholder confirmation and based on the buy lows of twitter, it required 67 percent.

So two-thirds of the shareholders of twitter need to agree for this deal to go through now. Usually it's a very high threshold sixty-seven percent. The deal has to be bellissimo super sweet. This deal is sweet, but not as sweet as you would say.

Well, it's a shoe-in for any shareholder right. However, here's the kicker you have to understand what kind of company twitter is and what kind of a purchaser ellen is ellen. Isn't some private equity guy he's a guy who took tesla and 300 x the share price since its ipo until now? On the other hand, twitter sends it ipo that 26 was at 40 before ellen started buying eight years later, they know he's good for the managerial skills. They know he's actually the guy who's going to come in and going to be actively involved in this company.

He isn't some corporate raider who's going to chop it up and break it apart. He actually wants to see this happen, so the shareholders are looking at this and they're saying well look. This is a really bad market. Inflation is going crazy.

Interest rates are going up. Every single tech stock is basically crashing right now, even some of the best ones in there yeah google, facebook, everybody is basically in the red. This guy is going to give us a premium 38 compared to april first price before he started. You know announcing that he's buying like a 40 premium before he started buying that's insane right.

Another risk that always tends to float on these sort of deals is that the purchaser might just say well, i'm backing out my grandpa always told me hey until you sign you're the king, they can't make you do anything and in this case, until elon actually closes You know he can always back out at least theoretically, but the theory here would be very, very unlikely. We're talking about a guy who has been on record saying this is not a financial deal. This is on principle, a company he wants and must own for freedom of speech and all sorts of things. And besides go back in history and look elon made about 200 million off of paypal.

He didn't buy real estate and a bunch of you know cash producing businesses and just set back and never worked again. He put everything in a space rocket company, my guy, a person who's like financially motivated, isn't going to do that. So you know twitter is not such a great business, but would ellen back out with everything that he went through the amount of money that he already raised and committed and how much he actually put out. I would just say it's very unlikely and when you have a purchaser, that's that rich that determined at owning this company, regardless of its performance or qualities.

You know, elon, isn't some private equity fund he's a guy with a lot of money and the determination to own the him backing out at this point would be very, very unlikely. Now. Look, let's talk about it. Honestly.

The downside here, if this thing falls through, is huge. If this, for whatever reason doesn't happen, the stock price is going to go to the 30s, maybe the 20s so be careful here. But for me it's a fairly simple deal. It's a cash offering financing is secured.

I know the main risk is probably just elon changing his mind, which you know to be honest: it's elon, so it's always a possibility, but i don't think it's likely in this case and if you want to learn more about these sort of strategies head on over To our patreon, the link is going to be below it's five bucks per month, where i share my different ideas and strategies and we have a bi-weekly that means twice a week. Zoom call when i chat with you one-on-one, you know i'll see you there in just a few days later.