Market Swears Off Pessimism for a Day

That was not the case here, meaning a worst-case scenario was avoided. But "somebody is getting hammered," the source said, noting the "huge" volume in Dreyer's stock. Over 15 million shares of the ice cream maker traded Wednesday, more than 25 times its average daily volume of the past 30 days, according to Baseline.

Large holders of the stock, according to Bloomberg, include Citadel Investment Group in Chicago (1.5 million shares) and Kingdon Capital (600,000 shares), two large hedge funds known for employing merger arbitrage strategies.

The Dreyer's meltdown could be particularly troubling for Kingdon, whose assets have fallen to about $1.5 billion from over $4 billion in mid-2001, due to poor performance and redemptions, according to sources familiar with the fund.

I was unable to reach Citadel and Kingdon declined to speak to me, citing a policy of not talking to the press.

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