Merger arbitrage · Warner Bros. Discovery
The spread closed, and two things we wrote in August were wrong
On 29 August we published the funds that had bought Warner Bros. Discovery below an agreed all-cash price while twelve states sued to stop the deal. On 30 September a judge cleared it. This is what that was worth, and what the full register shows that our first table did not.
HolderBook · from Q2 2026 Form 13F filings and the companies' SEC disclosures
Judge Araceli Martínez-Olguín approved the consent decree between Paramount Skydance and twelve state attorneys general on 30 September 2026, dissolving the order that had blocked the merger since July. The companies said they expected to close on 6 October. Holders of Warner Bros. Discovery Series A common stock receive $31.00 in cash, plus a ticking consideration of $0.00277778 per share for each day after 30 September.
That last figure is the same number reported everywhere as a ticking fee of roughly $7 million a day. Across a register of about 2.5 billion shares it is a third of a cent each. The same quantity reads as enormous or trivial depending on which end you stand at, which is most of what makes merger arbitrage worth writing about.
What the position was
A merger arbitrage is a judgment about whether something will be allowed to happen, expressed as a number. Warner Bros. Discovery had agreed in February to be bought for $31.00 a share in cash. Through the second quarter the shares traded well below that, and the funds on our August list bought the difference.
They paid an average of $26.66. Against $31.00 that is a gross spread of 16.3%, available to anyone willing to believe the deal would survive a lawsuit from twelve states.
The first thing we got wrong
Our August table ranked the register by position value, and on that basis Symmetry Investments at 29.54% of its book was the most concentrated name we showed. We called it the largest bet on the list by a distance.
It was the largest on that list. It was not the largest.
| Manager | Position | Share of their book | What they did that quarter |
|---|---|---|---|
| Samson Rock Capital LLP | $25m | 55.01% | Added |
| Marble Bar Asset Management LLP | $48m | 33.08% | Added |
| Symmetry Investments LP | $437m | 29.54% | New position |
| Mediatel Partners | $6m | 23.76% | Held |
| One68 Global Capital | $19m | 20.41% | Added |
| PSquared Asset Management AG | $61m | 19.86% | Added |
| Twin Securities | $42m | 18.69% | Trimmed |
| P Schoenfeld Asset Management | $41m | 16.75% | Added |
| Sessa Capital IM | $804m | 13.45% | Trimmed |
| Third Point LLC | $533m | 11.39% | New position |
Ranked by share of book rather than by dollars. Samson Rock and Marble Bar are small enough that neither appeared in a table sorted by position value, which is exactly the problem with sorting by position value.
Samson Rock Capital had 55% of everything it reported in this one deal. That is a different kind of position from Third Point's $533 million, which is larger in dollars and 11.39% of a much bigger book. Dollars tell you who moved the most money. Weight tells you who was most exposed to a judge in California.
The second thing we got wrong
We wrote that Symmetry's position "points the other way", because $212.9 million of its $436.8 million sat in put options. A put rises when the shares fall, and against a cash offer that reads as a bet the deal would break.
That was too quick. Holding the shares and holding puts against them at the same time is not the opposite trade. It is the standard shape of a hedged merger arbitrage: the stock captures the spread if the deal closes, and the puts limit the damage if it does not. Symmetry was not betting against the merger. It was buying the spread and paying for insurance.
What the insurance cost is not knowable from the filings. A 13F reports what a position was worth at quarter end, not what was paid for it, so the $212.9 million is a valuation and not a premium. If the deal closed as scheduled those puts expired worthless, and that was the point of them.
Who arrived for it
Third Point and Symmetry both opened their positions during the quarter. Fenelon Opportunity Fund appears for the first time in our records with $215 million, 10.73% of its book. Caxton Associates added to reach $518 million. Sessa Capital, the largest holder on the list at $804 million, was trimming.
Trimming into a spread this wide is not obviously wrong. A fund that had held the position since February was sitting on a gain before the states sued, and taking some off is what a risk limit does rather than what a view does.
What we still do not know
Every figure here is from 30 June 2026. The lawsuit was filed in July, the settlement approved on 30 September, and the deal set to close on 6 October. Three months of trading separate the register from the outcome, and the filings cannot tell us who was still holding when the judge ruled.
The filings covering 30 September are due in the middle of November. Those will show who sat through the lawsuit and who left during it, and that is the more interesting list. Buying a spread is a decision anyone can make. Holding it through twelve attorneys general is a different one.
Holdings, values and share counts are from Form 13F filings as reported, corrected for amendments. Share of book is the position as a percentage of everything that filer reported for the quarter. Derivative lines are identified separately. The merger terms, the court's approval and the expected closing date are from the companies' SEC filings and contemporaneous reporting, not from 13F data. Not investment advice.