Hedge Fund Reader : Hedge Funds Capitalize on Share Speculations

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March 06, 2006

Hedge Funds Capitalize on Share Speculations

Increasingly Hedge funds are capitalizing on share speculation, as European hostile or unsolicited M&A bids reach a six-year high. The unsolicited bids augur well for share-speculation. The initial bid is generally rebuffed, increasing the chances of a second or rival offer and resulting share price jump. Reuters reports:

In a recent textbook case, shares at ports firm P&O (PO.L: Quotazione, Profilo) rocketed 65 percent during a three-month bidding war between Dubai Ports and PSA International, ending in Dubai Port's second, 520 pence offer. Its shares were trading near 315 pence per share before the first offer at 443 pence.

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March 6, 2006 in Research | Permalink