Employing an EVA style classification, we examine whether active investors (such as hedge funds and other long-short investors) can develop an alpha-generating strategy by classifying acquisitions based on the pre-acquisition EVA style quadrant of the acquirers. Over a recent ten-year period, the announcement evidence suggests that acquisitions across all style quadrants generate negative risk-adjusted returns: wherein the magnitude of economic gains from shorting acquirers is determined by EVA style characteristics; namely wealth creators or wealth destroyers. Moreover, we find that the potential for longing gains on targets of acquiring firms is also captured by EVA style.
Grant, James and Trahan, Emery A., "Active Investing in Strategic Acquirers Using an EVA Style Analysis" (2007). Financial Services Forum Publications. Paper 15.