Event-driven investing or Event-driven trading is a hedge fund investment strategy that seeks to exploit pricing inefficiencies that may occur before or after a corporate event, such as an earnings call, bankruptcy, merger, acquisition, or spinoff.[1] In more recent times market practitioners have expanded this definition to include additional events such as natural disasters and actions initiated by shareholder activists.[2] However, merger arbitrage remains the best-known investment strategy within this group.[3]
This strategy was successfully utilized by Cornwall Capital and profiled in "The Big Short" by Michael Lewis.