Over on CXO Advisory, they talk about a recent study of hedge funds and what characteristics mark the good ones. The conclusion was:

In summary, hedge funds that conservatively smooth out market bumps with minimal net exposure to equities and mid-range returns tend to be the most reliable outperformers.

Translation: The hedge funds that actually hedge perform best. The modern hedge fund has become a catch-all for any type of investing, including all out Wild West directional plays. But those that actually attempt to have neutral market exposure plus some alpha rule the day. Brilliant!