Question on type of Equity Fund

Interested as well

It's almost a trick quesiton to even try to answer this because the definition can vary so widely depending on who is saying it. But a good guess might be an equity fund that focuses on things like spin outs, carve outs, liability situations, distressed equity, and possibly even merger arb as a "special situation." Broadly speaking, these would be event driven / uncommon situations that are not strictly based on fundamental data and "typical" investing strategies (value investing, buy low, sell high, whatever).

One example might be a fund that actively seeks equities that are engaged in asbestos liability claims and tries to handicap the maximum claims value, then overlays that on the current price to see if the companies are a buy or not. Most investors would just assume the stocks in question are toxic waste and wouldn't even try, but that's not always the case.

Another one might be a company that had an extremely negative outcome that most people think is going to go bankrupt. Early in my career I evaluated a pharma manufacturing company that had an FDA-forced shut down of its main facility. They couldn't produce revenue, yet couldn't cut fixed costs all the way either because they would need their labor once the factory re-opened. The Street thought it was a zero and the stock got down well under a dollar. We looked at the probability of the timing of a re-opening of the factory based on precedent, FDA behavior patterns, etc. and overlaid an estimate of the company's financials onto that analysis and thought it was about a 50 / 50 shot. We took a small position on the shot, and the stock went up nearly 20x after the facility was opened (i.e., the probability adjusted valuation was extremely favorable so a small bet was a reasonable call even if it might ultimately be a zero). Most investors wouldn't even look at that kind of scenario, so I'd call that a special situation.

I would also say rights offerings and warrant situations are also special situations -- that's something the fund I work for participates in heavily.

Probably risk arb, one time special dividends, convert arb plays, cvrs, etc..

I'd add index additions/deletions - heck, Baupost has a dedicated analyst for it.

If you haven't read it yet, Joel Greenblatt's book You Can be A Stock Market Genius is an excellent primer (my opinion) on special situations strategies for equities.