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Do hedge funds operators hold the key to Cadbury future?

Richard Lambert, the director-general of the CBI, has today opened a potential "can of worms" with a suggestion that hedge funds operators and other short-term investors should have their voting rights curtailed in relation to the ongoing potential takeover of Cadbury. It would appear that there are things happening behind the scenes with regards to Cadbury as the share price has risen substantially over the last few days and is now well above the takeover offer price relating to the Kraft Foods share and cash offer.

The suggestion that short-term shareholders, i.e. those looking to bank a short-term profit, may not have the best interests of the underlying company at heart is not a new one but the potential to reduce their voting rights is a new development. While if you take a step back and consider the situation, the idea of reducing voting rights for those in for the short term does have some merit, we operate in a free market and a market where supply and demand will in the end dictate any share price.

To give an example, if hedge funds operators moved into a particular stock, such as Cadbury, and pushed the price higher due to a shortage of stock then what is there to stop longer term shareholders from banking a profit if they do not believe in the possible "emerging situation"?

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