Six Stocks Activists May Rock in 2006

This column was originally published on RealMoney on Jan. 19 at 1:00 p.m. EST. It's being republished as a bonus for TheStreet.com readers.

Not many strategies worked last year. Many tried and true hedge fund tricks failed miserably. Convertible arbitrage was down more than 5% on most of the hedge fund indices, and merger arbitrage was flat. What worked was picking stocks that were down and out but had potential, and rocking the boat until an entrenched management turned around.

Naysayers can point to individual cases like Time Warner (TWX Quote) and say, "That stock has gone nowhere, so activism doesn't work," but it's best to look at the funds that are doing this type of investing and see how they've performed as a group. (Fortunately, there is no index following this group, so it hasn't been inundated with dollars to the point at which it becomes a useless strategy.) ...