Hat tip to Marketfolly for posting this interesting piece by John Paulson on risk arbitrage. In case you were wondering he wrote this chapter around 2000 so long before the markets deemed him the modern day King Midas. Below is an excerpt from the book, Managing Hedge Fund Risk: From the Seat of the Practitioner: Views From Investors, Counterparties, Hedge Funds and Consultants by: Virginia Reynolds Parker. In the excerpt Jon Paulson discusses his views on risk arbitrage. Remember Paulson & Co was and is a risk arb shop, so this is JP's bread and butter. To be honest I haven't read this book yet but if the other chapters are as rich on content as the one below it may be worth a read.