Generally, they are very active traders. One benefit of the hedge fund trading is that they increase the liquidity in the market..
Hedge funds’ high trading, plus the fact many borrow money on top of client capital to invest, can magnify their impact.
Since some of the price movements are very great when hedge funds are trading in a particular stock because of derivative actions, prices very often move too far in the overvalued or undervalued territory.
Investment Week 09 Apr 2010