With bonds in what he calls a mild bear market, influential investor Bill Gross has a different theory on where to find opportunity these days.
He calls it an “arbitrage type of idea,” one that is looking to take advantage of certain deals in the works. Arbitrage is a tactic that takes advantage of price differences to make profits.
For one, Time Warner can offer investors a 5 to 15 percent return if the deal to be bought by AT&T “goes the right away,” the Janus Henderson bond fund portfolio manager said on Wednesday on CNBC’s “Power Lunch.”
The fate of that $85 billion deal is now in the hands of a judge after the Justice Department sued to block the merger. A decision is expected in several weeks.
He also thinks investors have the potential to get a 5 to 10 percent type of return on Monsanto, and Aetna“offers even more.”
Bayer is trying to wrap up its pending $62.5 million acquisition of Monsanto, while CVS Health agreed in December to acquire Aetna for $69 billion.
“I’d go convertible equity in terms of these situations to earn a high rate of return with a little bit more risk, obviously.”
— Reuters contributed to this report.
Be the first to comment