The funds that we often see holding a top position in a stock could either be of a long-short type, or they could be activist funds.

Activist hedge funds are the ones of the most interest to me in my premium newsletter, Game-Changing Stocks. These funds typically have the longest time horizons among hedge funds: When they see value in shares of a public company, value that cannot be realized until some of the current conditions change, these investors take matters into their own hands. They build a position, and then try to implement the desired changes. Activist investors could target management changes, company breakups, spinoffs, dividend initiations or increases, or even liquidations.

Often, these changes can lead to big-time gains for investors. Thus, when investing alongside an activist hedge fund, you are advantaged in a few important ways, to which you can also add strong research capabilities.

Hedge funds employ some of the best analysts in the industry.