a. Nondirectional. The shares in the fund and the short position in the index swap constitute a hedged position. The hedge fund is betting that the discount on the closed-end fund will shrink and that it will profit regardless of the general movements in the Indian market.
b. Nondirectional. The value of both positions is driven by the value of Toys “R†Us. The hedge fund is betting that the market is undervaluing Petri relative to Toys “R†Us, and that as the relative values of the two positions come back into alignment, it will profit regardless of the movements in the underlying shares.
c. Directional. This is an outright bet on the price that Generic Pharmaceuticals will eventually command at the conclusion of the predicted takeover attempt.
