So do activist hedge funds really create value? Well, as the saying goes, give your economists a spreadsheet and they can pretty much prove anything. So the record is mixed. Activist themselves can argue that they have a great track record. But two Harvard business professors, Robin Greenwood and Michael Schor, took a look at long-term returns in cases of hedge fund activism between 1993 and 2006. As an article on the Institutional Investor website notes, they ended up with mixed results. They tend to be most successful in situations where a takeover is likely. But they tend to be not so great overseers of management when the turnaround takes more than a few quarters. And while funds can effect change in certain policies--CEO pay, for example, it is unclear if these changes add to shareholder value. I'm sure this is not the last word on the issue.  

For more:
- here's the article from the Institutional Investor website