Hedge funds gamble on Merger SuccessInvestors are betting that the FTSE 100 gambling giant behind Paddy Power and Betfair will succeed in merging with Stars Group the Canadian owner of Sky Bet in a 10billion deal. Hedge funds have placed bets of 250million in recent days against Flutter Entertainment in an effort to cash in on its all-share deal. Short positions in Flutter which has a market value of 5.9billion have surged to an all-time high and now represent nearly 5 per cent of the company's shares, according to the Financial Conduct Authority. This is up from just 0.59 per cent three weeks ago. Short-selling experts told The Mail on Sunday their bets were what is known as 'merger arbitrage', where hedge funds look to profit from mergers through complex trading tactics.As Flutter investors will own 55 per cent of the enlarged group, it is technically the buyer in the transaction. In an all-share merger, hedge funds typically buy shares of the company being taken over while shorting shares of the acquiring company in this case Flutter if they think the deal will go through.