The Age- ALLCO Finance Group faces more pressure after hedge funds were forced into the market to buy millions of the troubled company’s shares.
The buying resulted in AFG shares jumping by as much as 30% before closing 9.6% higher at $1.03, a 9¢ gain.
But Tom Elliot, managing director of hedge fund manager MM&E Capital, said much of the buying was the result of stock lenders demanding the return of AFG shares that hedge funds had borrowed to sell "short".
Short selling consists of borrowing shares and selling them on market with the expectation the price of the shares will fall. When the share price falls, the debt is repaid by buying the shares on market at the lower price and returning them to the stock lender.
