True - if they have a margin call - but the stock didn’t move much and if you believe in efficient markets, inevitably it will go to where it should be.
But it’s a fair point - you are correct. Thanks for explanation - I wasn’t seeing that side of it.
The stock moved up 27% the day Elon announced his 9.9% holding, which was about a week after he should have filed the registration papers for his ownership of 5%. And, of course, anyone selling stock in the week before his big reveal also have a legit claim of damages, as they could have sold at a higher price.
Hmmm. Never stand in the firing path of an Elon Bro group hug. Backing away slowly.
(yeah, I know. Mixed metaphors.)
I don’t own Twitter stock, but if I did I’d be overjoyed and would cash out immediately. Whatever your feelings about Musk, his interest in Twitter has breathed life into a dog with fleas. Take a look at Twitter’s profit (loss, really) trajectory. The management and board are losers. Musk just might improve it.
Edit to add the price chart here…another reason to cash out: Symbol Lookup from Yahoo Finance
2012: -$79 million
2013: -$645 million
2014: -$577 million
2015: -$521 million
2016: -$456 million
2017: -$108 million
2018: $1.2 billion
2019: $1.4 billion
2020: -$1.1 billion
2021: -$221 million
Mark Cuban surmising Elon’s twitter offer has prompted FAANG/big tech companies to consult with anti-trust lawyers to see if they can get a twitter deal done:
“Every major tech company , Google, fb, et al is on the phone with their anti trust lawyers asking if they can buy Twitter and get it approved. And Twitter is on the phone with their lawyers asking which can be their white knight. Gonna be interesting”
One thing I’d add here is that Elon’s stock price offer isn’t phenomenal given that the stock was higher in recent times. And also he plans to take it private. Normally, if I am buying a stock I want unlimited upside. Knowing I’m going to get a 20% upswing isn’t going to make me that excited. I still bought Twitter recently, mainly to support free speech and shutting down those who can’t stand to see an open algorithm. But I’m not expecting big $. IF it stayed pubiic one could see real $$.
It depends - on an arbitrage, 20% in one year is awesome.
I recently bought Casper - the bedding company stock - didn’t even know about it. They were being taken private -at $6.90. I had no clue it even existed until I read an article that it jumped 15% to $6.35 or so because the shareholders approved the buyout.
So I bought in at $6.38 and a week later I was out at $6.90. So I made 8% or what not in a week.
That’s arbitrage. There are experts that do this, funds that do this.
I own Activision Blizzard. Now Microsoft is buying it (post my purchase) - so it sits around $80. I’m up - I’d sell it - the company isn’t great. But the buyout is $95 and short of an anti-trust block (and it’s possible), I’m going to make another 20% in the next year. It’s a cash buyout so if it goes through, no more upside.
It’s still a great return.
The flip side is - I arbitraged on RAD - Rite Aid - because Wal Greens was buying it. It was blocked - and let’s say i’m down 95% or so and still own that turd.
So you can win - but it’s not an easy game for amateurs (of which I am one).
Actually that’s called long side speculation. Arbitrage is…
In arbitrage you are trying to take advantage of differences in pricing and valuations across multiple markets and products for the same entity. You accomplish this by shorting when over valued and going long where undervalued in expectations that ultimately markets will reach “equilibrium” pricing. Professionals often use derivatives like CDS to leverage these positions.
“Arbitrage” can also loosely refer to one’s knowledge of a material, publicly known fact that the public generally ignores. Of course, it is still a gamble but an educated gamble. 
That still to me rings of spec trading.
I am old enough to recall Ivan Boesky😀. The trading of any MNPI (material non public information) is also known as insider trading. I have worked on an arbitrage desk for decades never worked on an insider trading desk😀
The Casper Trade (founders are Brown alum) and was in the public domain.
One time I went to buy a mattress. Everyone was paying 5-6K for a tempurpedic.Spouse and I tried it, was great. But not willing to part with that much $$ ( about 20 years ago). I bought the stock. It got bought out and I made quite a bit.
Back to the thread topic, for me 20% isn’t enough upside based on the issues at hand. I think it’s equally likely to go down more than 20% if Elon Musk’s offer is refused.
A different kind of arbitrage:
I’m NOT talking about insider trading. That is criminal, obviously. This is about true outsiders using some info widely available to anyone, like Pubmed articles with clinical data on old molecules that fizzled out in the past clinical trials. If one is armed with the right knowledge, one can mine that old data to get a feel for whether the drug will be successful in further evergreening trials.
I understand but a one sided trade in expectation of some piece of information being realized by the broader market is investing it isn’t arbitrage. I won’t debate it but it is what I have done professionally.
Arbitrage is exploiting market inefficiencies across multiple markets and products.
Merger arbitrage is the business of trading stocks in companies that are involved in takeovers or mergers** . The most basic of these trades involves buying shares in the targeted company at a discount to the takeover price, with the goal of selling them at a higher price when the deal goes through.
There are also mutual funds which focus on this arbitrage.
Anyway, not here to debate - i was simply pointing out that some people make it a habit of buying shares in companies that have made arrangements to be acquired. The funds also try and guess who’s next - to be bought out.
Arbitrage in this case is a very common term used - you’ll see articles on this in all the major pubs, CNBC, and the like.
But no reason to debate this.
Here is an arbitrage example applied to colleges: Suppose a student is admitted to both Florida State University and Florida Agricultural and Mechanical University for an engineering major. Since the two schools share the same engineering division, the student can get the same engineering education at whichever one offers a lower net price.
I guess teh Board wants to cap his ownership at no more than 15%.
Once again arbitrage by definition of those that do it professionally involves both a sale and a buy.
Specifically merger arbitrage, often considered a hedge fund strategy, involves simultaneously purchasing and selling the respective stock of two merging companies to create “riskless” profits. Because there is the uncertainty of the deal being completed, the stock price of the target company typically sells at a price below the acquisition price. A merger arbitrageur will review the probability of a merger not closing on time or at all and will then purchase the stock before the acquisition, expecting to make a profit when the merger or acquisition completes.
I am not debating but stating fact. Once again this is what I did professionally at 2 bulge bracket firms throughout my career.
That’s called investing, prop trading or spec trading.
Hopefully, this won’t give any ideas to someone to create a new derivative based on college admission/selection!