In order for an investor to participate in a tender offer, what position must they hold in the security?

To participate in a tender offer, an investor must hold a net long position in the security. A net long position means that the investor owns shares of the security and has a beneficial interest in them. This is crucial because a tender offer is typically initiated by a company or individual seeking to acquire a certain number of shares from existing shareholders at a specified price, often at a premium over the market price.

Investors can only tender (i.e., offer) their shares for sale if they own those shares, which is why holding a net long position is a prerequisite. This allows the investor to capitalize on the opportunity presented by the tender offer, potentially realizing a profit if they choose to sell their shares at the offered price.

In contrast, holding a net short position, having no position, or being in any position other than long would not provide the investor with the ability to tender shares, as they do not possess ownership of the shares being offered in the tender. Therefore, recognizing that a net long position is essential for participation in a tender offer helps clarify the mechanics of how such corporate actions work in the securities industry.