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Hedge funds avoid sticky situation in Cadbury

Date: Monday, September 7, 2009
Author: Laurence Fletcher, Reuters.com

Figures from Data Explorers today show hedge funds have again been largely right in their short positions, this time in Cadbury.

Shares in the world’s second-biggest chocolate and sweets maker shot up around 38 percent today after it snubbed a 745 pence a share bid but many funds had long since closed their shorts.

Data Explorers’ figures show stock out on loan — a strong indication of short interest — in Cadbury fell from from more than 4 percent in May to just 1 percent by last Thursday.

However, this had crept up from around 0.5 percent in July, indicating a few funds had been betting on a price fall, perhaps to balance out long positions in more cyclical stocks that were rallying.

Meanwhile, hedge funds continue to profit as their short bet on VW’s ordinary shares continues to profit — today the shares touched a year low.