What is the potential exposure for GAMMA's advisory clients who hold the pre‑merger Class A shares?

Potential exposure

GAMCO’s advisory clients that still own the pre‑merger Paramount Global (PAR) Class A shares are effectively “long” a stock whose merger consideration is now being challenged in a Delaware class‑action lawsuit. The exposure is the down‑side gap between the current market price of the Class A shares and the value that will be delivered to shareholders once the merger is consummated (or unwound).

If the market continues to price PAR at roughly the same level as it did in the days before the August 7, 2025 announcement (≈ $7‑$8 per share) and the court ultimately finds the consideration – a mix of cash and Skydance‑issued stock – to be “unfair and inequitable,” the equity component could be written‑down by a few dollars per share. For a typical advisory client holding, say, 10,000 Class A shares, a $2‑$3 per‑share shortfall translates into $20‑$30 k of potential loss. The total exposure for the 750 clients collectively could run into the low‑mid‑hundreds of millions of dollars, given the aggregate pre‑merger position reported by GAMCO.

Trading implications

• Short‑side risk: Until the merger consideration is resolved, the Class A shares remain vulnerable to a downward correction. A modest short position or a protective put can hedge the downside for clients who cannot off‑load the shares quickly.
  
• Liquidity & price action: The lawsuit has already injected a negative bias (sentiment –60) into the ticker, and volume has spiked on the “class‑action” news. Expect continued selling pressure and a technical break below the $7‑$8 range to act as a trigger for further declines.
  
• Event‑driven opportunity: If the court awards a favorable settlement or the merger proceeds on terms that are deemed fair, the stock could rebound sharply. Position sizing should therefore be modest, with a clear stop near the recent low (≈ $6.50) and a target at the pre‑merger price level if the case is resolved positively.

In short, GAMCO’s advisory clients face a potential multi‑million‑dollar downside exposure on their pre‑merger PAR Class A holdings. Managing that risk through hedges, tight stops, and close monitoring of the class‑action developments is the most prudent approach.