A special situation is an unusual event that forces investors to buy a stock or other asset in the belief that its price will rise.
Special situation investment opportunities often arise from breaking news or rumors of news about to be released. They can involve spin-offs, takeover bids, mergers, acquisitions, bankruptcy, litigation, capital structure shifts, shareholder activism, share buybacks, and any other event that could affect a company’s near-term prospects.
There are investment funds dedicated to exploring special situations. They usually have “Event Driven” or “Opportunistic” in their fund names.
