MSN MoneyCentral – Shares of drugstore chain Rite Aid Corp. rose in midday trading Monday after hedge fund Tudor Investments disclosed it has been buying up shares, spurring investor speculationabout a restructuring, a recapitalization or a sale of the company.
Tudor Investments disclosed in a Securities and Exchange Commission filing Friday that it owns 28.2 million shares, or 5.3 percent of the company’s outstanding stock. Rite Aid shares rose 19 cents, or 4.5 percent, to $4.42 in midday trading on the New York Stock Exchange. The stock has ranged between $3.23 and $4.90 over the past year.
The market often follows the lead of hedge funds because investors see hedge funds as smart money. Also, hedge funds often buy large positions in companies and angle for change to goose share prices. Tudor’s acquisition of Rite Aid shares may be leading investors to speculate about mergers, restructuring or another technique hedge funds typically demand to boost stock prices.
“The rumor mill is kind of working overtime,” said Raymond James analyst John Ransom. “You’ve heard everything from the company going private to the company buying up some of the stores floating around to a recapitalization.”