Tuesday, December 7, 2010

Beneficiaries of the FBI's Insider Trading Investigation

I have been following the investigation by the FBI about the possible use of insider information from expert networks.  As with everything else, someone's misfortunes may be another firm's gain.  I came across this article on Fortune's site.  Several types of hedge funds are positioning themselves to take advantage.  Hedge funds that use a quantitative method of picking stocks do not use fundamental research and have no need of an "edge".  Their strength lies in the accuracy of their algorithm.  Large firms and fund of funds with good compliance departments that safeguard their investors will also be less hurt by the probe.

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