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Message: <blockquote data-quote="newfie" data-source="post: 6097438" data-attributes="member: 58700"><p>it’s fairly common for hedge funds to face margin calls when the market takes a downturn, especially if they’re heavily leveraged. Hedge funds often borrow money to amplify their bets—sometimes a lot of it. When the market swings against them, the value of their collateral (like stocks or other assets) can drop below the threshold required by their lenders. That’s when brokers or banks issue a margin call, demanding more cash or assets to cover the shortfall. If they can’t pony up, they’re forced to sell off holdings at the worst possible time, which can snowball into bigger losses or even blow up the fund.</p></blockquote><p></p>