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It is surprising to me that Alleghany ( symbol Y) is trading 1.6% below the price Buffet has agreed to pay $834 vs $848. Beats CDs unless you go out a full year. It is easily liquid, rate resistant and I would think as safe as treasuries or CDs
Just be aware of risks of such merger arbitrage for BRK + Y.
There was a go-shop period for Y that has now ended. Stockholders' and regulatory approvals are pending. There are no breakup fees (so any party can walkaway for any reason(s)). Y was trading at $600s before and has been $800s after. That defines your risk-reward.
Speaking of guaranteed money, we are taking advantage of online checking account, SoFi Checking of 1.25% with a monthly direct deposit, .7% without a monthly direct deposit. Our local bank is .01%.
No minimums, no fees, FDIC insured. We've used SoFi for approaching 3 years, before they became a bank. CEO is former COO of Twitter and managing director of Goldman Sachs.
By invitation, Citibank is offering a $700 bonus if you open a new checking account and keep $50K in the account for 60 days, starting 20 days after you open the account.
Admittedly that's only 1.4%. If you're willing to live with a lower dollar bonus, the bank will give an invitee $300 for a 60 day deposit of $15K. That's a full 2%.
I'll go along with yogi that there's usually risk in arbitrage. The risk is why the market gives these arbitrage opportunities.
With Citibank offer, the money is instantly liquid (it goes into a checking account), it is rate resistant (face it, Citibank is never going to pay any real interest on checking), and virtually by definition is as safe as an FDIC-insured CD. The only risk is that Citibank fails in the next few months and you don't get the bonus.
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There was a go-shop period for Y that has now ended. Stockholders' and regulatory approvals are pending. There are no breakup fees (so any party can walkaway for any reason(s)). Y was trading at $600s before and has been $800s after. That defines your risk-reward.
No minimums, no fees, FDIC insured. We've used SoFi for approaching 3 years, before they became a bank. CEO is former COO of Twitter and managing director of Goldman Sachs.
Admittedly that's only 1.4%. If you're willing to live with a lower dollar bonus, the bank will give an invitee $300 for a 60 day deposit of $15K. That's a full 2%.
I'll go along with yogi that there's usually risk in arbitrage. The risk is why the market gives these arbitrage opportunities.
With Citibank offer, the money is instantly liquid (it goes into a checking account), it is rate resistant (face it, Citibank is never going to pay any real interest on checking), and virtually by definition is as safe as an FDIC-insured CD. The only risk is that Citibank fails in the next few months and you don't get the bonus.
In any transaction where there's a payoff (the risk premium with buyout or the deposit bonus with Citi), it's not only the percentage gain that matters but the time to payoff. With Citi it is 60 days plus a little slosh. The stock acquisition will take longer - the expected closing is in 4th quarter.
https://www.financierworldwide.com/fw-news/2022/3/22/berkshire-hathaway-agrees-116bn-alleghany-acquisition
That sure beats JPMorgan Chase: They cancel your free safe deposit box if you keep $50k in your checking account for 60 days.