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The Bottom Feeders'

Traders Magazine, July 2000

Staff Reports

To make a quick buck, some hedge funds give the industry a black eye by quickly profiting from information leaking out of a giant mutual fund. The mutual fund, for example, may be accumulating a large position in XYZ stock.

Let's say XYZ stock is offered at $20. The hedge fund, hearing about a mutual fund's plan, immediately buys 100,000 shares in XYZ by taking all the stock offered in a price range of $20 to $20 1/4 a share.

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