Public trading strategy
Value rotation and cheap debt fuel buyouts — long GFL Environmental
Thesis
GFL Environmental exploring a take-private deal provides a clear, fundamental catalyst for upside that is uncorrelated to the volatility in the tech sector. Meanwhile, the Dow Jones hitting record highs shows capital is rotating into industrial and value stocks. Add in the President's aggressive push to keep interest rates low—which makes financing buyouts cheaper—and the environment for M&A is highly favorable. This is a low-risk way to play the market rotation.
Strategy approach
Build a merger arbitrage / momentum strategy that enters long GFL on D1 when volume spikes > 200% of the 20-day average and the stock breaks above its prior 10-day high. Exit if the stock drops 8% from entry, or hold for up to 45 days to capture the premium to the take-out price.
Markets and timeframes
GFLD1