Weighing The Risks

Matt Osowiecki of Water Island Capital - Event Driven Strategies and Their Diversification Benefits in a Portfolio

Episode Summary

This week, Rusty Vanneman and Nick Codola talk with Matt Osowiecki, Co-Chief Investment Officer at Water Island Capital. In this episode, we discuss Event Driven Strategies. In particular, we look at their diversification benefits in a portfolio, especially in the context of an election year and during higher volatility equity and fixed income markets.

Episode Notes

This week on Weighing the Risks we are joined by Matt Osowiecki, Co-Chief Investment Officer at Water Island Capital. Mr. Osowiecki joined Water Island Capital 2007 and currently serves as Co-Chief Investment Officer of the firm. Prior to being elevated to Co-CIO in 2024, he served as a Portfolio Manager on the merger arbitrage strategy, and he continues to serve as a named Portfolio Manager on several of the firm’s funds. He has been a Portfolio Manager for the Arbitrage Fund since June 2016 and a Portfolio Manager for the Water Island Event-Driven Fund since September 2023. Prior to being promoted to Portfolio Manager, Mr. Osowiecki worked as a Senior Research Analyst on the merger arbitrage team at the firm. Prior to joining the firm, Mr. Osowiecki worked in the Investment Product Division of The Hartford and as a project manager in commercial real estate development. Mr. Osowiecki received a BS from the University of Connecticut.

Key Takeaways

• [02:03] - Learn more about Matt’s professional background and his work at Water Island Capital.
• [03:21] - How does Matt define risk and how does he think advisors and investors should think about it?
• [04:22] - What are some of the various Event Driven Strategies? How do Event Driven Strategies differ from Merger Arbitrage strategies?
• [08:42] - What are the main risks of Event Driven Strategies. Also, has a more aggressive FTC made those risks work? Lastly, what are the implications of her, or a new head of the FTC, for the Event Driven space?
• [15:32] - What are some of the drivers for the strong Q4, and specifically December, returns that Event Driven Strategies seem to foster.
• [16:24] - It is difficult to put Event Driven Strategies into an ETF strategy - how did they accomplish this at Water Island Capital?
• [18:41] - How do Event Driven Strategies dampen volatility in a conventional stock/bond portfolio?
• [20:40] - Base case market scenario and how probably Matt thinks this is.
• [21:40] - Good case market scenario and how probably Matt thinks this is.
• [22:37] - Bad case market scenario and how probably Matt thinks this is.

 Quote

[08:42] ~ “The main risk [for] Event Driven Strategies, the obvious one, is that the event doesn’t play out the way the investor anticipates. I don’t want to say it just doesn’t occur, because it is always possible to bet against an event occurring, but the main risk again is that the investor is positioned the wrong way for the outcome of the event.” ~ Matt Osowiecki

Links

• Matt Osowiecki on Linked In
• “Enter Sandman” by Metallica
• Water Island Capital

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