Event-Driven Strategy

The GMO Event-Driven Strategy seeks to generate absolute return by investing in opportunities that arise from significant corporate events where there is generally some uncertainty about the outcome of the event in question and where the outcome will be known relatively soon. In practice, the Strategy’s portfolio generally includes a heavy focus on merger arbitrage transactions, supplemented by other opportunities that exhibit similar risk, return, and time horizon characteristics.

GMO’s Event-Driven team approaches this opportunity set with a strong emphasis on expected value, assessing the likelihood and returns of each outcome and focusing on situations where the team’s assessment of the expected value is greater than that implied by the market. The governing philosophy behind this value-based approach is that the event-driven space, like many other investment markets more broadly, often exhibits excesses of greed and fear that can lead to compelling value opportunities for investors who combine thoughtful research with a philosophical willingness to deviate from the crowd.