A special situation in finance is an atypical event which has the high potential to alter the future course of a business, materially impacting the company's value.
The connotation of the event may be both positive (for example, merger or acquisition) and negative (conflict, distress, etc.)
To take advantage of a special situation, a hedge fund manager must identify an upcoming event that will increase or decrease the value of the company's equity and equity-related instruments.
In the broader sense, a special situation is one in which a particular development is counted upon to yield a satisfactory profit in the security even though the general market does not advance.
[2]In his well-known book Security Analysis, Benjamin Graham divides special situations into six classes:[3]