Enterprise Group of Funds of Atlanta has announced plans to introduce a mutual fund focused on corporate takeovers. Enterprise will launch the Enterprise Mergers and Acquisitions Fund in the first quarter of 2001, the company announced.
Gabelli Asset Management of Rye, New York will manage the fund. The fund will practice merger arbitrage and will invest in companies believed to be acquisition targets 12 to 18 months in the future, according to the announcement.
In merger arbitrage, a portfolio manager buys shares of a target company and then makes money on the difference between the price of the stock immediately after the merger announcement and the price investors are paid for their shares when the deal becomes final.
In the last three years, 89 companies held by the Enterprise Small Company Value Fund, another Enterprise fund managed by Gabelli, were subject to takeovers.
The Enterprise Group of Funds is comprised of 26 funds with $4.7 billion in assets.