Most hedge funds are underperforming the markets this year. In fact, since 2004, most hedge funds have actually underperformed the boarder markets, despite the huge bull market in stocks.

Since most hedge funds get paid based on their returns for the year, managers who do not want to underperform are often turn to shareholder activism as a way to increase shareholder value and ultimately boost their returns.

Here are some of the latest activist situations for those interested in piggybacking off the top hedge funds.

William Ackman of Pershing Square Capital Management said that the process that led to the CVS (CVS) transaction was "seriously flawed" and that the value of Longs Drugs (LDG) substantially exceeds the bid of $71.50 a share. Pershing Square owns 3.1 million shares in Longs and holds an economic interest via total return swaps for another 9.2 million shares (taking its total position to 25.6% of Longs).

Advisory Research holds a 9.2% stake in Longs and doesn't plan to tender its 3.3 million shares for CVS's offer "unless there is some dramatic change of circumstances." David Heller, president of Advisory Research, said that he wants Longs to “tell everyone what their real-estate holdings are so other people can come in and be bidders.” Ackman has publicly stated that he believes Longs Drugs real-estate value is worth around $2.8 billion to $2.9 billion alone and has said a deal could happen in the $90-to-$95 range.

Longs Drugs is the fourth-largest drugstore in the U.S. and operates about 520 stores located in California, Nevada, Arizona and Hawaii. It trades with a forward P/E of 22, a PEG ratio of 1.5 and EV/EBITDA of 10.5.

Next on the list is Amylin Pharmaceuticals (AMLN). Investor Carl Icahn has raised his ownership in Amylin to almost 8%. Icahn has been in discussions with Amylin management and intends to seek to have further conversations with management and members of the board to discuss various possibilities to enhance shareholder value.

Additionally, hedge fund Eastbourne Capital owns 12.55% of Amylin and has had discussions with management to increase its position above 15%.

Famed money manager Mario Gabelli of Gamco Investors has boosted its stake in Alpharma (ALO) 7.38% (3.08 million shares) from 5.54% (2.31 million shares). Alpharma develops, manufactures and markets pharmaceutical products for humans and animals worldwide.

Sir Richard Branson owns 52 million shares (or 63.1%) of Virgin Mobile (VM). Virgin Mobile trades with a forward P/E of 11.5, a PEG ratio of 2.1 and EV/EBITDA of 5.9.

Alexander & Baldwin (ALEX), a transportation, real estate and agribusiness, saw Breeden Capital purchase about 2.66 million shares, raising its stake to 6.44%. Alexander & Baldwin trades with a forward P/E of 13.1, a PEG ratio of 1.9 and EV/EBITDA of 8.1

For more activist ideas, including Dish Network (DISH) and Wendy's (WEN), please check out the Latest Activist Situations portfolio.

Also, here are the latest activist filings from Barron’s.

Posted on Sept. 28, 2008