WaMu's Surge Rooted in Overreaction

Washington Mutual (WM Quote) surged 12% after British hedge fund manager Toscafund Asset Management disclosed a 6% stake in the ailing thrift.

But the story the rest of the media is missing is that the majority of these shares owned by Toscafund were probably already purchased back in April.

That month, Toscafund invested $648 million in the $5.5 billion convertible preferred PIPE deal that Washington Mutual issued, according to private placement tracker documents related to the deal. Toscafund was the second-largest investor behind private-equity firm TPG, the documents show. ...