Merger Arbitrage Blog

Trading Update-Successful Cabela Megatrade

Hi everyone it has been sometime since I updated my trades. Previously, I had reduced my holdings down to two major positions in Cabela's and Monsanto. All trades don't work exactly as we thought and Cabela's being a highly volatile merger play, went into a deep slump in August due to concerns on whether a few questions:

1. Can the Federal Reserve Board approve the bank sales to Synovus in time before the deadline of the merger agreement with Bass Pro Shops on 3rd Oct? YES

2. Is Synovus divestiture of credit cards operations to Capital One outside the jurisdiction of the OCC (which opposed the takeover of the bank assets of Cabela's back in Jan  2017)? YES

3. Will Cabela's operating results continue to slump and will Bass Pro walk away or re-negotiate if the results are abysmal. YES AND NO

Fast forward to 7th Sep 2017. Happily the answers to the above questions are in our favor. What strengthens my belief and my own research are the selfless contributions and researching and discussion from the members from seekingalpha's community regarding Cabela's merger. My account was up to 30k in red due to August slump and I had to get rid of my Monsanto's position to add to more to Cabela's at amazing prices around $52-53.   

The Federal Reserve Board approved Sterling Bancorp's merger with Astoria Bank on 30th Aug and the community members were discussing on seekingalpha if bank sale of Cabela's to Synovus will be next since there was another closed meeting scheduled on 31st Aug. Since the 4th Sep was Labor Day, the announcement should come around on the 6th. On the 5th Sep trading day, traders were disappointed that no annoucement was forecoming, pushing the price downwards. On 6th, the whole day went by without any concrete news except rumors and suddenly after market close, BOOM! The annoucement came at the end of the day and CAB promptly shot up close to merger price in the after market trades. On the 7th, the first trading day after the annoucement that FRB had approved the deal, CAB was trading at $61.20. I sold some of my positions at this level. It won't be Cabela's without the usual drama as a rumor came out in mid-day saying that Bass Pro's bond holders were pressuring the company to walk away and the share prices promptly dropped to near 60. I sold out all at around $60.90 to $60.64 range, unwilling to risk too much if the rumor came out to be true. In truth, there is probably no truth in the rumors but a little bit of prudence won't hurt. Later at market closing, Bass Pro's CEO belatedly came out to confirm the closing period in line with Cabela's earlier statement.

All in all, it was a nice trade for just about 2 months and an annualized returns of 61%.



Updated: September 8, 2017 — 7:42 am


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  1. Hello MergerPie!

    Was right there with u on this one, all the way!

    Congrats to Us!!!

    Made over $100k on the trade!

    Would be interested in your offer to form a group to confer on future trades 

    Feel free to contact me middle of next week, as I am currently running from hurricane Irma now!

    I live in South FLORIDA now…

    Frank Wellenstein 

    402 916 0488

    1. wow! thats’ a great trade! I am moving on to BRCD. Stay Safe!

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