ALONG for the RIDE

March 2004
Investment Dealers' Digest;3/29/2004, Vol. 70 Issue 13, p30
Trade Publication
This article analyses the assets and drawbacks of hedge funds. Companies' desire for cheap funding has led them straight into the arms of the hedge funds, who have come to dominate the convertibles market in the past few years. But the hedge fund interest requires a trade-off. In the first place, hedge fund buyers almost always short the stock of the company when they buy it, often causing the stock to fall, at least temporarily. But that's not all. Because of the hedgies' complicated trading strategies, the short-selling demand is so intense that some believe that the hedge funds may be skirting the rules. At least a few individuals close to the hedge fund world are wondering whether some funds are finding out about deals ahead of time in order to borrow stock required for the short-selling strategies.


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