Looking ahead to 2014

3 big hedge fund predictions for 2014

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For many hedge funds, and their investors, 2013 was a year to forget. Shuttered funds that were once investment world darlings; hedge fund shorts that short-circuited in the extended stock market run; Bill Ackman's controversial Herbalife call and surrender at JC Penney (not to mention his live CNBC spat with Carl Icahn); overall returns that look lackluster compared with the S&P 500; and of course, the saga of Steven Cohen and SAC Capital Advisors. But there were some standouts in 2013, including activist funds like Third Point, Trian Partners and Jana Partners, and stock-focused firms like Glenview Capital Management, Passport Capital and Owl Creek.

Will next year bring a change in fortune to the majority of hedge funds? Here are three big hedge fund predictions for 2014:

Hedge funds will not advertise during the Super Bowl.
While hedge and other types of private funds are now allowed to advertise for the first time, few will take advantage of their new privileges. Some don't want to change their secretive culture, which can help cultivate an air of exclusivity and prestige. Others simply don't need the money, as their firms are closed to new investment or their clients tend to be large institutions, such as pensions and endowments with whom they're already in touch. Sure, some smaller and younger firms will get out there, but the money brands will continue to stay quiet.

(Read more: Wall Street—The day of reckoning nears)

Short sellers will make a ton of money when the market corrects.
Hedge funds that focus on betting against stocks have taken a beating during the post-financial crisis bull market. Many have even gone out of business because of recurring double-digit losses. But if they can hang on and stocks fall sometime next year—especially bubbly technology-related companies—short sellers will make a killing and prove their bullish naysayers wrong.

(Read more: Poll finds advisors are keeping clients on course)

Alternative mutual funds will keep coming—and disappointing.
More and more asset-management firms will repackage elite private fund strategies into mutual funds for retail investors. But the promise of putting hedge and private equity–like returns in a portfolio or 401(k) will largely go unfulfilled. Private-fund juice often comes from their ability to invest however they want without being constrained by retail fund rules around leverage, shorting and liquidity. Add high fees on the new funds and it's unlikely they'll outperform.

By Lawrence Delevingne, CNBC.com