It was the first stock I ever bought, and it was the second and the third, too.
The year was 1978, and I was at Carleton College working on my bachelor's degree. During that time, I would regularly drive from Northfield to St. Peter, Minnesota... And on one particular drive, I was confronted by a huge green giant towering over the Minnesota River.
You may recall the ad campaign for the Jolly Green Giant. The name Green Giant comes from a variety of peas bred to be especially huge. Now, suddenly, one Friday, a huge 50-foot wooden giant was smiling down on me.
Pretty soon, I was seeing Green Giant ads everywhere. I discovered that for years my mother only bought Green Giant products. She swore by their quality. For several months, I noticed other products and ads for Green Giant.
I couldn't get the Green Giant out of my mind. My intuition was piqued. I loved eating Green Giant foods. The brand loyalty was strong.
This seemed like my ideal first stock purchase.
With $800 of my hard-earned money, I bought Green Giant. It was frightening, but it felt good. The best part was the feeling of ownership I had – I loved the quality of the company and the food it produced.
But what came next was truly amazing...
Shortly after I bought shares, Pillsbury offered to buy (technically "merge with") Green Giant. My $800 of stock was suddenly worth $1,200, and I felt rich. Stock picking was easy.
But within weeks, I became confused. You see, Pillsbury was willing to pay $45 for the company, but Green Giant stock was only trading for $41.50. Shouldn't the market price have risen to match the offer? I was frustrated and asked my broker, who knew nothing and couldn't really explain the difference.
So I did the only thing that made sense... I bought $500 more. Over the next week, while my college beer money remained tied up in a vegetable maker, the price of Green Giant stock remained less than the Pillsbury offer.
At this point, it all seemed so obvious. I took out $1,000 more in college-loan money and even borrowed $500 from my dad. Yep, I bought a third time. I bought all the Green Giant stock I could and used up all my savings and credit to do it. I was hooked.
Within a couple months, the merger went through, and I made more than 40% on the money I invested. The returns were astonishing for such a short period of time.
Over the past few decades as an investor, I've discovered that opportunities like these come along quite regularly. I saw this when I worked on Wall Street, and I'm seeing it now.
This strategy is called "merger arbitrage."
You invest in the target of an announced takeover and then get bought out at the final price when the deal closes.
To understand this opportunity, you need to know what happens when a public company gets purchased...
The buyer offers to pay a premium to the market price for shares. It announces the deal, and shares will rise close (but not all the way) to the deal price. So for example, if a stock was trading at $20, a buyer may offer $25 for shares. On the news, shares would jump to, say, $23 or $24 and hover there until the deal was completed.
After all, the deal could still fall through. The financing may not work out, regulators may block it, or shareholders may not approve it.
If the deal gets canceled, the shares will fall somewhere near their previous level. But if the deal closes, the shares will finish at the deal price, and investors will make a profit.
Merger arbitrage is a powerful strategy... About 90% of deals close successfully. And over the past 36 years, merger-arbitrage strategies have had about one-fourth the volatility of the broader market.
Just recently, my subscribers have benefited from merger arbitrage.
We own a company called Ansys (ANSS). Ansys provides advanced tools that help businesses design, test, and optimize complex physical systems before they're built. Its simulation software is widely used in industries like aerospace, automotive, electronics, energy, and health care.
In December 2023, news broke that Ansys was in talks to be sold to Synopsys (SNPS) in a deal worth about $35 billion. Shares surged from around $300 to $360 in a matter of days. But the stock price was nowhere close to where it would be if the deal went through. (The deal was structured so that investors would receive $197 and 0.345 Synopsys shares for each Ansys share owned. That put the total value closer to $400 per share.)
The deal was reportedly delayed thanks to Beijing and Washington, D.C. sparring over technology trade restrictions. But on Monday, Synopsys said it finally received approval from Chinese regulators.
The stock finished up 3% on Monday. And yesterday, it rose another 2%, to $392.72 per share. Take a look...
Both companies expect the deal to close tomorrow. So with the stock trading near the offer price, my team and I sent an update out to subscribers to sell their shares and book their profits.
Though this merger arbitrage took longer to play out than most because of the sticky situation with China, it was a way to earn safe returns... Merger-arbitrage investors can protect themselves against further downside in the stock market, while still achieving bull market-like returns.
Plus, merger arbitrage is a great diversifier...
Everyone knows the value of a diversified portfolio. Diversification is the "free lunch" that allows investors to construct portfolios with better risk-adjusted returns than their individual components.
Merger arbitrage has a correlation with the S&P 500 Index of roughly 0.53. (A correlation of 1 means the two assets move up and down together, negative 1 means they move in completely opposite directions, and 0 means there's no relation between their price movements.) So a correlation of 0.53 is a good way to hedge your risk.
When you're constructing your own portfolio, it's vital to be diversified – especially with market valuations near all-time highs... You need growth stocks, international stocks, "chaos hedges" like gold and gold miners, and special, low-risk opportunities like merger arbitrage.
Pulling off this balancing act is difficult for most individual investors.
Fortunately, there's a simple solution... I and several other top editors at Stansberry Research have created one perfectly balanced, fully diversified portfolio built to grow in any market condition imaginable.
It's called The Total Portfolio.
Not only do we tell you when to buy and sell each stock in this diversified portfolio, we update you every month on what percentage of your portfolio should be allocated to each position. Best of all, our position-size calculator can do all the math for you and tell you exactly how many shares you should be holding. It's an easy and headache-free process.
We've owned Ansys since last year in The Total Portfolio as one of our conservative plays... So subscribers who act on our sell recommendation today will book their double-digit gains.
And moving forward, we'll be on the lookout for other merger-arbitrage opportunities.
I would encourage all investors who are looking to be truly diversified to give The Total Portfolio a chance.
To learn more, check out a presentation that I recently put together.
What We're Reading...
- Something different: Federal Reserve Chair Jerome Powell asks inspector general to review controversial building project.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
July 16, 2025