Hedge funds profit from stock sales

Connecticut Post – Hedge funds that in the past sought to profit from rising and falling equities are gaining by buying into companies that sell shares to cut debt and fund purchases, according to SAC Global Investors LLP’s Rob Leach. Companies led by HSBC Holdings PLC, the world’s third-largest bank by market value, sold about $140 billion of stock in Europe this year mostly to replenish capital, data compiled by Bloomberg show. Some of those have gained more than the market amid optimism that fresh funds will help them grow more than their peers.

“Hedge funds are exploiting the potential profitability of equity capital markets activity,” Leach, a partner and portfolio manager at the $14 billion, Stamford-based hedge-fund firm run by Steven Cohen, said at a conference organized by Thomson Reuters Corp., the news and data provider, in London. “Never have situations been more frequent and deal sizes so large,” said Leach, a former investment banker.

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