AQR, Elliott Among Hedge Funds Reviving Appraisal Arbitrage Play

Elliott Investment Management, Man Group Plc, an AQR Capital Management affiliate and dozens of other investment firms are reviving a once-dormant arbitrage tool that challenges deals in the most closely scrutinized US business court.

Appraisal arbitrage involves buying a company’s shares after a deal announcement and then objecting to the terms in court. If a judge appraises the deal at a higher value, the investor pockets the difference — turning the legal process into a profit engine for hedge funds.

The play — allowed under the law in Delaware, where most US firms are incorporated — lost its ...