A special situation is a corporate event that changes who is obliged to hold a security. Spin-offs, rights offerings, index deletions, liquidations, recapitalizations, tender offers: each one hands a population of holders a reason to sell that has nothing to do with what the asset is worth.
The analytical work is unglamorous and mostly consists of reading. The advantage, where one exists, comes from two things institutions cannot easily buy: the patience to wait out a mechanical seller, and an account small enough that the resulting position is worth holding. This topic explains how the situations work — including the ones where the forced selling is a perfectly accurate signal that the asset is impaired.
