Hedge Funds Create ‘Abnormal’ Returns in Short Run as Well as the Long

Are Activist Hedge Funds and Other Institutional Investors friends, enemies or frenemies?  Additionally, so-called activist hedge funds are often considered a nuisance or even as a necessary evil, notably because of their focus on short-term gains. But do they bring more to the table?

The answer to the question is a resounding yes, according to a study out of Canada. Researchers at the University of Prince Edward Island believe hedge-fund activism generates abnormal returns over both the short run and the long run, without increasing stock return volatility.

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“These...