Sometimes, speculation is just about sitting still and waiting for history to repeat. That seems to be the view of several hedge funds positioned to reap the benefits of Sprint Nextel's ( S) buying spree.

New York-based hedge fund Glenview Capital Management was among the winners on Nov. 21, when shares of Alamosa Holdings ( APCS) jumped up 13% to $18.35 on the announcement that Sprint Nextel would buy the wireless affiliate for $3.4 billion.. It was the fourth acquisition of an affiliate by Sprint since its merger last summer with Nextel.

A hedge fund manager who owns Alamosa says that the market is betting that the buying spree will continue.

Sprint's acquisition of Alamosa was the fourth time the wireless company bought one of its affiliates since its merger with Nextel this summer. The deal followed the purchases of U.S. Unwired, IWO Holdings and Gulf Coast Wireless. Sprint Nextel is doing the deals as a way to resolve litigation, as Sprint has been sued by several of its affiliates for alleged violations on noncompete agreements. Alamosa, for instance, had filed a lawsuit against Sprint Nextel regarding some exclusivity covenants; the acquisition will solve the problem.

According to a June regulatory report, Glenview owned 162 million Alamosa shares, or 8.6% of the company. It reached the 5% threshold in December of last year, but it has been a shareholder for several years, acquiring many of the shares when Alamosa acquired AirGate.

Other large hedge funds were long the stock as well. D.E. Shaw owned 2.9 million shares, or a 1.78% position, while SAC Capital Advisors had 2.7 million shares, or a 1.66% stake, at the end of the third quarter.

So what's next? The market senses gains elsewhere. On Nov. 21, shares of UbiquiTel ( UPCS), another Sprint's affiliate, jumped to a 52-week high to $9.77. Nextel Partners ( NXTP), another affiliate, which remains at odds with Sprint over the price of an acquisition, has also been a subject of hedge fund speculation.

Highbridge Capital Management owned 3.2 million shares, or 3.42%, of UbiquiTel as of the end of September. Paulson & Co., Caxton Associates, D.E. Shaw and SAC Capital Partners are among the top 20 institutional holders of Nextel Partners, according to Thomson Analytics. Paulson owns 9.4 million shares and raised its stake in Nextel Partners to 5.1% last month, according to a 13D filing.

On Thursday, shares of Alamosa were trading at $18.44, 13% higher than their $16.26 pre-announcement level on Nov. 18. UbiquiTel was trading at $8.85, up 8.7% from when the Alamosa deal was announced. Nextel Partners, at $26.50, was up 3.7% from its $25.55 price on Nov 18.

Spreading It Around

Companies continue to throw money back at their shareholders, a victory for hedge funds activists. There has been $245 billion worth this year through Sept. 30, a value that has already surpassed all of 2004's $197 billion. This year should top $300 billion, says Howard Silverblatt, an analyst at Standard & Poor's. He predicts $200 billion this year in cash dividends, which would create a record of half a trillion dollars for what is generally referred to as "value returned to shareholders."

So what does it all mean? One opinion is that companies have nothing better to do with their money. Another is that activist pressure has piqued their generosity. Both are probably true. One way or the other, though, it's good news for investors, says Silverblatt.

Rah Rah

"Running a big hedge-fund complex is like being the coach of an NFL team. The smartest, best-organized, hardest working team with the most talent and the most cold-blooded management wins. Nice, relaxed, friendly guys who are tolerant about mistakes finish last and go out of business."

That's how Barton Biggs, the legendary strategist and money manager, describes his industry. Biggs, who spent 30 years at Morgan Stanley ( MWD) before launching his Traxis Capital hedge fund, just published a book called HedgeHogging, coming to bookstores soon. It's like a diary, full of gossip, with anecdotes about anxious and anonymous managers.

Diverse Funding

The asset management arm of Deutsche Bank ( DB) has teamed up with Robert Johnson, the former CEO of Black Entertainment Television, to create a fund of funds that will play the diversity card. Johnson says that he is "branding himself in the financial sector." His RLJ Cos. already manages $800 million in real estate funds. Johnson adds that he wants his joint-venture with Deutsche Asset Management to become one of the largest asset management companies controlled and directed by African-Americans. "Those state and public pensions manage money for transportation workers and government workers where you have a lot of African American and Hispanic minorities. We want people allocating money to consider talented African-American managers," he says.

Subprime

The quest for higher returns is leading many hedge funds in one of two directions: to illiquid investments or long-only strategies. That is the conclusion of a research report released last week by Morgan Stanley. The illiquid "premium" strategies include distressed securities, structured credit, collateralized debt obligations, small-cap equities, emerging markets and private equity. And the long-only ideas lead to activism, sector funds or concentrated portfolios. Perhaps this explains why prime brokerage revenue growth is expected to slow down next year to 11% from an estimated 28% this year, according to the report.

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