The recent fateful Volkswagen short shows how risky it can be to follow the herd. But why do so many hedge funds own stock in the same companies?
By Britt Erica Tunick
When Porsche's attempted takeover of Volkswagen sent VW shares soaring in October, hedge funds that had been shorting the stock took one of their biggest hits of the year. Not simply a bad trade, it was another harsh reminder of the downside risk when multiple hedge fund managers pile into the same names.
For years, the tendency of hedge