Special Situation
Graham viewed workouts as businesslike underwritings of terms, timing, and downside.
Published: 2025-12-26
Definition
Special situations (workouts) are event-driven positions whose payoff depends on specific corporate actions rather than broad market moves.
Graham's framing
They resemble business deals: you underwrite terms, timing, and downside instead of forecasting prices.
How to use
Diversify across events, avoid leverage, and size by downside versus expected payout after timing.