I don't know what they are exactly, either...but here is something that seems to explain it from Wikipiedia:
"As the name implies, hedge funds often seek to offset potential losses in the principal markets they invest in by hedging their investments using a variety of methods, most notably short selling. However, the term "hedge fund" has come in modern parlance to be applied to many funds that do not actually hedge their investments, and in particular to funds using short selling and other "hedging" methods to increase rather than reduce risk, with the expectation of increasing return." - http://en.wikipedia.org/wiki/Hedge_fund
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timeasmymeasure
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Date: 2008-09-16 01:35 am (UTC)"As the name implies, hedge funds often seek to offset potential losses in the principal markets they invest in by hedging their investments using a variety of methods, most notably short selling. However, the term "hedge fund" has come in modern parlance to be applied to many funds that do not actually hedge their investments, and in particular to funds using short selling and other "hedging" methods to increase rather than reduce risk, with the expectation of increasing return." - http://en.wikipedia.org/wiki/Hedge_fund