What Are Hedge Funds Buying Right Now?: Arris Group, Inc. (ARRS) and More

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WMS Industries Inc. (NYSE:WMS) , which is in the process of potentially being acquired by smaller peer Scientific Games Corp (NASDAQ:SGMS), had John Rogers’ Ariel Investments report ownership of almost 8% of the company. Merger arbitrage can offer modest returns, but ones independent of market conditions, and there is a gap of about 4% between WMS’s current share price and the all-cash offer. However, the transaction would come at a large premium to WMS’s former share price, so there would be a significant downside if the deal fell apart.

Empire Capital Management, which is managed by Scott Fine and Peter Richards, has a stake of 5.4% in Jive Software Inc (NASDAQ:JIVE) with a position composed of both shares and call options. Jive is a cloud-based social business networking software company, a collection of buzzwords that have brought it to a valuation of nearly $1 billion even though it is unprofitable and high revenue growth has not improved its bottom line by much. Even in cash flow terms Jive has been just short of breaking even; 22% of the outstanding shares are held short.

The article What Are Hedge Funds Buying Right Now? originally appeared on Fool.com and is written by Jake Mann.

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