Hedge funds (hedge fund news) apparently got giddy when Consumer Reports issued its report on the iPhone 4. The influential publication said it could not recommend people buy the iPhone 4 because of its tests that showed a troubling signal loss when the device is held in a certain position. That led to lots of speculation about a recall and a big drop in the stocks. But that represents an opportunity.

Jason Schwarz, of the Economic Weather Station, writes: "What do the Hedge Fund's do on Tuesday? They feed the media with stories of a recall, 'PR experts say an iPhone 4 recall is inevitable!'  Beyond this kind of hysteria, the truth is that under a worst case scenario Apple would recall the few million iPhone 4's that have been sold and the problem would be solved."

Hedge funds aren't looking to short the stock. Rather, they are waiting for it to slingshot back, perhaps when the firm announces earnings July 20. "There is no better money making opportunity than the Apple slingshot. Apple's pristine balance sheet, exponential growth opportunity, and innovative future product pipeline give hedge fund's confidence that this stock will always bounce back after being beaten down." It's an interesting take.

For more:
- here's the article via Seeking Alpha

Related Articles:
Hedge fund start-ups perk back up
Hedge funds outperform stock indexes in first half
iPhone making inroads on BlackBerry at banks?
Are banks missing the Android market?