"Warren Buffett and the Art of Stock Arbitrage," by Mary Buffett and David Clark

"Warren Buffett and the Art of Stock Arbitrage," by Mary Buffett and David Clark, (New York: Scribner; 2010), 153 pages.

This book is another addition to the expanding category of books about Warren Buffett's approach to profitable investing. The unique feature of this book is that one of the authors shares the surname of the subject (because she was once married to one of his sons). This small book explains arbitrage, with occasional references to actual Buffett arbitrages. It also goes over topics of interest to the novice investor, such as what arbitrage is, types of arbitrage, how it can be used with great certainty to increase annual investment returns, how leverage (or borrowings) can greatly improve investment returns when it is used effectively (and the opposite - risk of loss or low profits in certain situations) and overviews of various real-world examples where Buffett used arbitrage to earn outsized investment returns. For example, the authors discuss the following:

·               friendly mergers

·               hostile takeovers

·               buy-backs and self-tender offers

·               corporate liquidations

·               corporate spin-offs, and 

·               stubs.

This is not a book for experts; on the contrary it is an introductory book on the subject of arbitrage. Experts should by-pass this book for I doubt they will benefit from the contents. It is mostly a book for novices on how arbitrage situations can be very profitable if executed properly. The spice or spin is added by the references to Warren Buffett through frequent reference to his success as an arbitrager, and example of situations were he profitably engaged in arbitrage. The message of the book is that the reader can profit, just like Warren Buffett, if you follow the guidelines provided in this book.