Hedge Funds as Distributors of Equity Exposure
Speaker
Abstract
| Convertible arbitrage hedge funds combine a long position in convertibles with a short position in stock. By creating these short positions in the open market, hedge funds distribute the equity exposure of the firm to a large number of well-diversified investors. We find that the distributive power of hedge funds provides financing opportunities for firms that find it relatively costly to attract investors who are willing to bear large equity exposure to the firm. Instead of directly issuing shares, these firms obtain indirect equity financing by privately placing equity-like convertibles to hedge funds. |
| Contact information: |
| Myra Lissenberg |
