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Active investors may have met their match

The destructive effect of a down market is intensified for activist hedge funds because they tend to herd.

BIRDS OF A FEATHER: The degree of their concentration in the stock market is one reason 2015 was an annus horribilis for many big hedge funds. Last year, Pershing Square lost 20.5%, Jana was down 5.4%, and Greenlight Capital fell 20%.

THE stockmarket slump has hit activist hedge funds particularly hard, raising the question of whether shareholder activism can survive a down market.

Activist hedge funds specialise in taking aim at troubled companies. The core idea is for the fund to push for a new strategy that will...