Hedge funds try to make big bets on good ideas. Sounds simple, but is getting harder today as there are many sharks out there trying to find the few chances the market offers. Hedge fund operations are not about trend riding, as many tend to think. Of course they do all sorts of things, but the core idea is to sniff around for the next good deal.

A good deal seen from the fund manager's perspective is something that has a discrepancy in price to value, or in todays price compared to a potential future price, but which is hard to recognize for the ordinary market participant. At least the fund manager tries to be quicker than the market in identifying and analyzing possibly exploitable situations.

Bankruptcies, complex nestings of capital and ownership, hard to understand interrelationships, special contractual situations or changing structures are the places of discovery for the next great idea. A hedge fund manager is after an informational edge, something that someone else doesn’t know or doesn't know yet. Some even hire private investigators to find out something before the broader markets does.