Pentwater Capital Management’s event-driven hedge funds delivered standout returns in the first half of 2025, soaring 21% on the back of a billion-dollar bet on United States Steel Corp’s acquisition by Nippon Steel, according to a report by Bloomberg.

The firm’s flagship Pentwater Event and Merger Arbitrage funds gained more than 7% in June alone, marking one of their strongest six-month performances on record, according to sources familiar with the returns. Key contributors included high-conviction positions in US Steel, Avis Budget Group, and the government-sponsored mortgage giants Fannie Mae and Freddie Mac.

Pentwater, which managed over $9bn in regulatory assets as of year-end 2024, was the largest hedge fund investor in US Steel throughout the contentious 18-month merger saga. Despite intense political opposition and regulatory uncertainty – most notably from President Biden – the firm held firm on its more than $1bn stake until the deal’s closure in June under the Trump administration.

Pentwater’s performance echoes that of other event-driven peers. London-based Melqart Asset Management, for example, posted a 13% gain in May – its best-ever monthly return – followed by a 4.7% rise in June, bringing year-to-date returns to 12.5%.

The US Steel transaction joins a wave of successful merger arbitrage bets in 2025, alongside high-profile deals like Discover Financial’s tie-up with Capital One.