Digging for bones, finding a rumour

It doesn’t take much to get the markets and the media chattering. All it really takes is a pesky hedge fund. One fund that one of these private investment funds, Pardus Capital Management, owns some Delta shares, and the other day Pardus made public a letter urging Delta to ‘take a lead’ role in airline consolidation and go out and look for a merger partner. Delta said it thanked Pardus for its interest, and that it in fact had already set up a committee to look at merger ideas. The markets and the media go crazy, shares spike and radio stations start calling around. Then one media outlet, the all-important Associated Press, the US version of the Press Association, comes out with a story swearing up and down that Delta had taken a lead role and was chatting away with United about a combination. The markets go even wilder, much like a dog digging for an old bone but finding a fresh rabbit. Within hours, Delta’s Richard Anderson, a man who tolerates little nonsense and buries no bones, comes out and has to deny that Delta is having any kinds of talks with United. None. Nada. The markets still jump up like that dog. Even after it’s revealed that Pardus owns United shares as well as Delta shares and so may be a winner no matter what - merger or no, so long as the shares go up.