Here's How Some Hedge Funds Are Accidentally Showing Their Hand

Hedge fund managers spend their time navigating through thick piles of data and analyzing the inner workings of the companies they invest in. Understandably, they like to keep those activities on the down-low, and make every effort to do that.

Unfortunately that's not always the case. According to The Wall Street Journal's David Benoit, many hedge fund managers were not aware that their own data providers were essentially tipping everyone off about their intentions.

It turns out that when subscribers, like hedge funds, read research reports from Bloomberg, McGraw Hill, S&P Capital IQ, and possibly Thomson Reuters, those data providers then turn around and inform the companies who wrote them.

"The information can be as detailed as naming the firm and even the person inside the firm who viewed the report," Benoit reported.

The cat's out of the bag now, and many hedge funds - particularly activist shareholders - are upset about it. But the practice isn't even new - it's long been in place, Benoit reported, and is readily disclosed by the data providers themselves.

A lesson in always reading the fine print.

Read the full Wall Street Journal story here>>