Last Tuesday, hedge funds that had betted on the collapse of Finnish telecom group Nokia were in for a surprise. This was after the telecom group had announced that it would be selling its handset business to Microsoft. Hedge funds rush to unwind their bets that had left the Finnish company stock clock a record daily gain.

Nokia shares increased to nearly 50% after news spread that the company would sell its handset business to US tech company Microsoft. Nokia's shares were down by 93% from a 2000 high of EUR65. The Finnish phone maker's move to sell its handset business was seen by analysts to lure back longer-term investors.

Prior the announcement, about 12% of Nokia's stock was out on loan. This was from long term holders of stock in the company. It had indicated the demand of hedge funds and others to borrow the stock in exchange of short trade.

Nokia's lost ground had been a popular venue for hedge funds to sell borrowed stock and hope to acquire it later at a cheaper price. This was because the Finnish smartphone maker's shares plunged over the last few years.

The news made the deal unwelcomed by most of the funds. According to a data shown by Markit, funds had borrowed around two-thirds of the available stock. The data balso showed hedge funds scrambled to acquire the Nokia stocks back and close loss-making positions.