The hedge fund industry now comprises more than 8,500 funds around the world and continues to grow. Given the ability of many funds to buy and sell large amounts of stock rapidly, it would seem natural that CFOs and other executives would be highly attuned to the rising clout that hedge funds can have with the companies they hold stakes in. But many executives often don't understand how investing philosophies differ among funds or how to deal with them as investors.

A case in point: Maverick Capital, with $10 billion in assets under management, has long been known as one of the largest and most consistently successful hedge funds. Yet Maverick, with offices in New York and Dallas, is not what most people might think of as a typical hedge fund. Rather than taking big bets on currencies, bonds, and commodities, Maverick relies on old-fashioned stock picking to generate its returns. Lee S. Ainslie III, Maverick's managing partner, likes to say that Maverick is more of a traditional hedged fund, investing only in equities and maintaining a balance of long and short positions. The 49 members of Maverick's investment team generate performance by understanding which stocks will be the best...