year in review:
n 2020, the BCM Merger Arbitrage Fund (BQ-3) posted a 4.2% return with an 18.63% annual volatility. Although it was a very good year for the S&P500 index, with a 16.26% return, its volatility at more than 31% remained a concern for many investors throughout the year. In particular, during the market tumble in March 2020, BQ-3 registered a maximum drawdown of 17.25%, while the S&P500 dropped by 33.96%. Furthermore, BQ-3 outperformed the Merger Arbitrage ETF NYSEARCA: MNA (“MNA”).
During the course of 2020, BCM analyzed a total of 133 transactions and participated in 30 M&A deals. The best performing transaction was the acquisition of Central European Media Enterprises (Ticker: CETV) by the PPF Group. The deal closed in 101 days on October 15th, 2020 with BCM obtaining a 22.79% return (82.35% annualized return).
Looking at the U.S. M&A activity as a whole, in 2020, of the total 133 deals that were announced, 116 were closed, and 13 were terminated. In 2020, MNA remained flat, registering a positive performance of only 0.39%. Despite all the headwind of the pandemic, during 2020 BCM was able to minimize volatility of its BQ-3 fund and provide a positive meaningful return, which is more than 10 times greater than MNA.
*Fund returns compared to the market.