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To: YanivBA who wrote (56284)	9/13/2006 4:37:25 PM
From: forceOfHabit	Read Replies (1) \| Respond to of 116555

yaniv, "This is big." bloomberg.com For sure. The hedge funds have found a way to monetize the tiniest technical default. Note that a standard hedge fund debt/equity strategy is, for company's with reasonable default risk, to go long the debt and hedge it with a short position in the stock (or buy puts). This latest wrinkle means that if such a company goes into technical default, the hedge fund wins on both sides of the trade! As it says in the article: ``You're taking advantage of a loophole in the system,'' said Frank ``Grange'' Johnson, who runs the $300 million LaGrange Capital Management hedge fund in New York. ``You're trying to send a company to jail for jaywalking.'' This is going to have everybody scrambling to rewrite the bond documentation....but how? foh