Leucadia National ( LUK), a decidedly low-flying conglomerate, is using its house hedge fund in an attempt to upend billionaire Paul Allen's all-cash bid for Houston energy partnership Plains Resources ( PLX). Why is the tiny $54 million hedge fund going up against Goliath? Because that's where the money is -- other people's money, that is. The winner of the Plains Resources bid would -- for a price of around $400 million -- take ownership of a company that exists to receive greater and greater sums of money from the Plains All America Pipeline ( PAA), a limited partnership. Listing a limited partnership separately from a general partnership is a common structure in the energy business, but some analysts say the arrangement conceals obscure yet critical financial information and dilutes shareholder value. According to Douglas Gill, editor of the Gas Processors Report, a Houston newsletter, it usually works this way: Companies sell assets to investors for a market price in return for an agreement to pay out the cash flow after maintenance expenses, plus they get to keep control. That makes the company the general partner. "As the general partner raises the payout to the investors, now known as the limited partners, the GP gets to go back in for a progressively higher share of the income," he wrote in a 2002 report. "So they take their investment out up front and still get to share in the income from the asset they've just sold. Not bad." As part of a takeover in this case, the new owners of Plains Resources would benefit from increasing cash flow, while holders of the pipeline company's stock would see more of their holdings' cash flow fill Vulcan or Leucadia's coffers. "Either way, Vulcan or Pershing will end up receiving the cash flow associated with the assets of PLX," says Alan Septimus, a research analyst with Oscar Gruss & Son.