Here are a couple of the most common strategies that hedge fund managers use;

Emerging markets: Investing in securities of companies in the ever emerging economies through the purchase of sovereign or corporate debt and /or shares.

Fund of funds: Investing in a "basket" of hedge funds. Some of the funds of funds focus on single strategies and other pursue multiple strategies; these funds have an added layer of fees.

Convertible arbitrage: This involves going long in the convertible securities (usually shares or bonds) that are exchangeable for a certain number of another form (common shares) at a preset price and simultaneously shorting the underlying equities. This strategy previously was very effective and was a standard. However this type of action seems to have lost effectiveness and it seems to have lost favor in the crowd.

Global Macro - Investing in shifts between global economies, often using derivatives to speculate on interest-rate or currency moves.

Market neutral: Typically, equal amounts of capital are invested long and short in the market, attempting to neutralize risk by purchasing undervalued securities and taking short positions in overvalued securities.

Here are other kinds of strategy used by hedge fund managers which I came across;

Trader: Seeks to exploit short-term volatility in the price of a security. The trader need not have an opinion on the merits of a company whose stock he trades or the appropriateness of a particular exchange rate-just an opinion on the short-term direction of the securities.

Stock Picker: Differs from the trader in that stock pickers tend to analyze a company's (or an industry's or a country's) fundamental business and make informed bets on their future direction. They tend to hold positions longer than a trader. Activist stock pickers try to personally intervene in company affairs. CEOs hate them.

Distressed Investor: Buys and sells the securities of companies in trouble, where there tend to be larger-than-usual differences of opinion over the relative merits of a stock or bond. Can also become an activist and attempt to take control of a company by buying a majority of its equity or, in bankruptcy, its debt.

Quantitative Investor: All numbers, generally relies on software-driven models that analyze historical trading patterns to inform current investment decisions, seek out price inefficiencies, or crunch financial-statement data in order to determine a theoretical price.