BUZZ-Gulf Keystone: rally continues as shorts squeezed out and retail buyers enter

** Gulf Keystone Petroleum rises 32 pct, taking two-day gains to 128 pct as a major restructure of the business continues

** Distressed debt funds set for large stakes in the Iraqi oil producer once a debt-for-equity swap completes

** Multiple traders cite a large short squeeze for the move on Monday and Tuesday

** Debt funds holding convertible bonds likely to be short stock to hedge against a deal falling through, and will need to close positions before the restructure completes

** Sothic Capital, understood to become a major shareholder if the restructuring completes, has been short the company's stock though 2016, though dropped below the 0.5 pct disclosure limit in May, according to FCA filings

** CapeView Capital the last hedge fund with a disclosed short at 0.78 pct

** Traders also cite Sunday Times report the company may be subject to a takeover bid once the restructuring is complete (Link: http://bit.ly/2a8suG9) as drawing in retail investors (stock the most active on a number of retail investment platforms on Tuesday)

** Investment managers TD, Hargreaves Lansdown (LSE: HL.L - news) and Barclays (Swiss: BARC.SW - news) Wealth all in top 5 shareholders, suggesting a large amount of retail money in the stock