The Rich Get Richer: How Hedge Funds Are Making Millions Tearing an Energy Giant Apart
It's easy to pick sides when a hedge fund takes a position in a stock. Sometimes they want to oust terrible management, making them heroes to the retail investors who wish they had the same power. In other instances, hedge fund operators push for financial engineering that may drive short-term gains but distracts management from running the business for the long term.
No matter what the circumstance, make no mistake: hedge funds are involved to make money.
What's worse, often times the long-term interests of a business may run counter to what makes the most money right now. And that conflict can create a situation like the one NRG Energy (NYSE: NRG) is in after hedge funds Elliott Management and Bluescape Energy Partners took big stakes in the company and were given board seats to agitate for change. As a result, NRG Energy is making a strategic shift that the market is happy about right now -- and, in the process, making millions for hedge funds. But it may end up in bankruptcy betting on these older assets.
Source: Fool.com
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