  We consider trading against a hedge fund or large trader that must liquidate
a large position in a risky asset if the market price of the asset crosses a
certain threshold. Liquidation occurs in a disorderly manner and negatively
impacts the market price of the asset. We consider the perspective of small
investors whose trades do not induce market impact and who possess different
levels of information about the liquidation trigger mechanism and the market
impact. We classify these market participants into three types: fully informed,
partially informed and uninformed investors. We consider the portfolio
optimization problems and compare the optimal trading and wealth processes for
the three classes of investors theoretically and by numerical illustrations.
