Hedge fund selling whacks Canadian takeover plays

It's becoming increasingly clear that hedge fund liquidations, rather than corporate fundamentals, explain the widening gap between takeover bids and the price that target companies are fetching in the market.

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On Wednesday, when it seemed Wall Street's investment bankers were all sailing onto the rocks, Teranet dropped to $10.66. That dip reflected forced selling by hedge funds that needed cash to fund redemptions or margin calls, rather than sentiment that the OMERS bid will fail, and the takeover battle is over before it began.