Warren Buffett and the Art of Stock Arbitrage: Proven Strategies for Arbitrage and Other Special Investment Situations

Warren Buffett and the Art of Stock Arbitrage: Proven Strategies for Arbitrage and Other Special Investment Situations

Posted by jack_miller | Published 7 months ago

With 31 ratings

By: Mary Buffett and David Clark

Purchased At: $17.49


Investors around the world recently learned that from 1980 through 2003 Warren Buffett’s arbitrage operations produced an astronomical average annualized rate of return of 81.28%. Even more amazing, this incredible rate of return was produced with very low rates of risk.

Long considered one of the most powerful and profitable of Buffett’s investment operations, but the least understood, these special types of investments have been the edge that made Warren Buffett so phenomenally successful. Warren Buffett and the Art of Stock Arbitrage is the first book to examine Buffett’s special brand of arbitrage investing.

Buffettologists Mary Buffett and David Clark explore the previously secret domain of Warren Buffett’s stock arbitrage investments. They explain how Buffett finds deals, evaluates them, picks the winners from the losers, and when he is willing to use leverage to help boost his performance in these investments to make amazing profits. Basic mathematical equations are included to help readers determine the projected rate of return, evaluate risk, and determine the probability of the deal being a success.

Buffett and Clark provide detailed explanations and examples of Warren Buffett’s methods for arbitrage, and for investing in tender offers, liquidations, spin-offs, and reorganizations. They take readers step by step from the initial public announcement to tendering shares, explaining how Buffett evaluates risk and maximizes his profit at every step.

 Warren Buffett and the Art of Stock Arbitrage is a valuable companion to the other books in Buffett and Clark’s successful series—Buffettology, The Buffettology Workbook, The New Buffettology, The Tao of Warren Buffett, Warren Buffett and the Interpretation of Financial Statements, and Warren Buffett’s Management Secrets.
This was a nice little book, but note that it's not intended as a manual for investing, but rather as a nice little intro into what arbitrage could look like. I would say that this book would appeal to two different camps for different reasons:

1. Total novice. If you're a total novice investor, or not even an investor but just an interested party, then this would be good. It's an easy read that gives you a glimpse into the world of arbitrage. BUT... heed the warning. Trying to randomly apply these things without understanding them will cause you a lot of financial hurt. The authors make these concepts sound very easy, when in fact full-time professionals spend a lot of time carefully analyzing and assessing these situations. The novice should use this book as a way to pique their interest, but not as a how-to manual for how to invest.

2. Total professional or mid-level investor. You already know what you're doing, and you're interested in reading about something you already know, but you want to hear about what Buffett might have done. This would be intellectual mind candy for you.

Again, interesting read. But do more research!

- josiah_gomez

Successfully combined & briefed the the topics with the Buffet's tactics. Though the book has a potential to elaborate more on the arbitrage knowledge, but the given briefing is quite enough. Anyway, the main thing here is Buffet's arbitrage tactics.

- leighton_brown

I had extremely high hopes for this book, thinking it could have a place on my bookshelf next to Joel Greenblatt's "You can be a Stock Market Genius" or "The Intelligent Investor" in terms of simple, clear thinking to find value and exploit market inefficiencies.
I was sorely disappointed. The math is overly simplistic- the authors apparently do not know how to compound interest (In the book, the authors estimate that 5% return a month is 60% per year, even though the real return is nearly 80%!)

Time and time again, the examples are overly simplistic to the point where one cannot learn anything of value. (Ex: If a company offers to buy a share of stock for $50, and it is trading for $40, you can buy the stock at $40 and make $10!)

These are just some of the examples that cause me to doubt whether the authors understand the books concepts in anything more than a superficial manner.

- nathan_hall

Great read

- laurel_long

Mary Buffett and David Clark explain how arbitrage turned Warren Buffett from a great investor into a worldwide phenomenon. Every year many arbitrage deals come along that are within every investor's grasp...if you learn how. The book takes you behind the scenes for a serious exploration of arbitrage techniques that have proven to work. I'd recommend this book to anyone wishing to study and put into practice these simple concepts.

- azalea_cox

Warren Buffet is the MAN!!!

- cairo_rivera

good book,easily readable,informative.

- clyde_miller

Be careful! This book has nothing to do with Warren Buffet, very basic, no real added value, it is like an academic math book with paragraphs explainig what is the result of 1+1.....

- roberto_miller

Ai principianti o a coloro che non utilizzano strumenti finanziari la lettura del libro instillerà la convinzione che in fondo sia semplice diventare miliardari: fare arbitraggio!

Semplice se hai gli strumenti per farlo, che ci vuole? Ti fai prestare i soldi a tassi minimi, acquisti titoli azionari sul mercato e li vendi a chi lancia un'OPA a prezzo superiore.
L'incasso, dedotti i costi e gli interessi, è strabiliante! chiunque potrebbe arrivare a fare il 55% all'anno.
Proprio così: chiunque abbia collaterali da dare a garanzia per ottenere i prestiti (non sanno cosa sia il credit crunch?), abbia informazioni privilegiate (magari in quanto azionista di un paio di agenzie di rating e diriga un team di analisti) operi in un mercato aperto all'investitore come quello americano e sia in grado di sapere in anticipo (chiaroveggente) che su una determinata azione sarà lanciata un'OPA. Il tutto nauralmente senza infrangere le norme in materia di market abuse

E chi ci spiega che è così facile fare soldi non è poi in grado di fare un semplice calcolo di interesse composto annualizzato. Infatti, partendo da un 5% mensile arriva al 60% annuo (5% x 12 = 60%) peccato che uno studente al primo anno delle superiori sappia che la formula dell'interesse composto sia differente e che il tasso annualizzato sia ben superiore.

Il pregio è che, come molti libri del genere scritti da autori americani, è facile da leggere, divertente e dimostra che anche Buffett non disdegna strumenti e metodiche che critica quando sono utilizzati da altri. A livello personale lo considero un libro per rilassarmi

- oaklynn_bennet

Da hatte Mary nochmal Kasse gemacht. Grundsätzlich nicht schlecht, aber doch eher einfach. Fortgeschritte werden einzelne Ideen verwerten können. Viele komplexe Themen sind einfach auf den Punkt gebracht. Es beruhigt, dass Warren auch bei seinen Investments öfter in die Bilanz und GuV schaut. Profis werden bei Ihrer Vorgehensweise generell hinter jedes Kapitel einen Haken machen können. Nach dem Motto: so ähnlich gehe ich auch vor...

- jolene_parker

Good book

- ariel_adams

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