How Kite Lake screens 500–600 M&A deals annually, executes reverse merger arb shorts, and caps European credit exposure at $1B — with 14 consecutive profitable years.
Thank you for this thorough description of how the fund works. I had the privilege to work for Massi consulting on German squeeze-out situations about 2007-2010 and it was both a pleasure to work for her and the most intense and rigorous review and Q&A on our results that I had in my career. Great discipline.
Thank you — that's the kind of detail no amount of outside-in research gets you. And 2007-2010 puts you in the Cheyne Special Situations years rather than Kite Lake itself, which if anything makes it more useful: that's where the discipline in the piece was formed, before there was a firm to attach it to.
One thing I'd like your read on, if you're able to say. German squeeze-outs sit in the fourth bucket in the piece, but they're the hardest fit for the 6-12 month hard-catalyst rule — the cash-out is fast, and the Spruchverfahren tail can run for years. Was that underwritten on the cash payment alone, with the appraisal uplift treated as a free option, or sized for the full duration?
If that's too close to a former client's process, entirely understood. Either way, thank you for reading it properly.
We indeed worked for Cheyne (and several other funds) during that time. As this particular trade doesn't work so well anymore and wasn't invented by Cheyne, here's how it worked: Once a company announced a takeover or squeeze-out intent, it would take several weeks for an auditor to produce an official IDW S1valuation that would serve for calculation of the price for minority shares. The funds hired me immediately to in 5 days produce an estimated IDW S1 valuation so they could see which way to place a trade. As we didn't have inside numbers, of course it was never 100%, but we got pretty close, so it was a fun little side business (we mostly do sell-side M&A).
That's a better answer than the question I asked. The catalyst wasn't the Spruchverfahren tail at all — it was the gap between the announcement and the auditor's published IDW S1, which is a hard-dated window measured in weeks. That fits the discipline cleanly, and it makes the edge analytical rather than legal: whoever could model the objectified value in five days knew which side to take before the number was public.
One more, if you don't mind. When you say it doesn't work so well anymore — is that competition, more people running the same estimate at the same speed, or the payoff compressing, with appraisal outcomes landing closer to the offered compensation than they used to? Those decay differently, and I'd rather not guess which.
Thank you for this thorough description of how the fund works. I had the privilege to work for Massi consulting on German squeeze-out situations about 2007-2010 and it was both a pleasure to work for her and the most intense and rigorous review and Q&A on our results that I had in my career. Great discipline.
Thank you — that's the kind of detail no amount of outside-in research gets you. And 2007-2010 puts you in the Cheyne Special Situations years rather than Kite Lake itself, which if anything makes it more useful: that's where the discipline in the piece was formed, before there was a firm to attach it to.
One thing I'd like your read on, if you're able to say. German squeeze-outs sit in the fourth bucket in the piece, but they're the hardest fit for the 6-12 month hard-catalyst rule — the cash-out is fast, and the Spruchverfahren tail can run for years. Was that underwritten on the cash payment alone, with the appraisal uplift treated as a free option, or sized for the full duration?
If that's too close to a former client's process, entirely understood. Either way, thank you for reading it properly.
We indeed worked for Cheyne (and several other funds) during that time. As this particular trade doesn't work so well anymore and wasn't invented by Cheyne, here's how it worked: Once a company announced a takeover or squeeze-out intent, it would take several weeks for an auditor to produce an official IDW S1valuation that would serve for calculation of the price for minority shares. The funds hired me immediately to in 5 days produce an estimated IDW S1 valuation so they could see which way to place a trade. As we didn't have inside numbers, of course it was never 100%, but we got pretty close, so it was a fun little side business (we mostly do sell-side M&A).
That's a better answer than the question I asked. The catalyst wasn't the Spruchverfahren tail at all — it was the gap between the announcement and the auditor's published IDW S1, which is a hard-dated window measured in weeks. That fits the discipline cleanly, and it makes the edge analytical rather than legal: whoever could model the objectified value in five days knew which side to take before the number was public.
One more, if you don't mind. When you say it doesn't work so well anymore — is that competition, more people running the same estimate at the same speed, or the payoff compressing, with appraisal outcomes landing closer to the offered compensation than they used to? Those decay differently, and I'd rather not guess which.
Thank you for this. Properly useful.