If they're reporting that they sold in 1Q, that means they sold under $40. In other words, they did not pick a good time to sell. They are therefore no smarter than the rest of us. In fact, 95% of hedge funds do not beat the market. If you buy stocks at a good value, and you have patience, you will make a lot of money in the market over time.
You're assuming a few things: 1) That 95% of them dont beat the market - post proof? 2) If they even care if they beat the market. 3) They're also locking in their profits - look at the Apollo Group's Leon "we're selling everything not nailed down" Black. I'm sure they dont want a nasty market reversal. 4) Are they even selling all their position?
HF managers tend to be somewhat short term in their thinking. (Berkowitz is an exception.) Combine that with the outrageous fees they collect and it is a mystery to me why any of their so-called sophisticated clients buy into their empty mystique. You can trade around these guys though. They sometimes flag good value. It is possible to make sure you get in under their purchase cost and get out at a better price too. You and I don't move the market when we buy and sell, those guys do.