{
  "slug": "long-short-equity",
  "name": "Long/Short Equity",
  "aliases": [
    "L/S Equity",
    "Equity Hedge"
  ],
  "category": "equity",
  "parent_strategy": null,
  "child_strategies": [
    "equity-market-neutral",
    "sector-specialist",
    "fundamental-l-s",
    "quant-l-s",
    "activist-short"
  ],
  "description": "A directional equity strategy that takes simultaneous long positions in undervalued securities and short positions in overvalued ones, seeking to profit from idiosyncratic stock selection while hedging some portion of broad market risk.",
  "investment_thesis": "Fundamental and/or technical analysis can identify mis-priced equities; pairing longs with shorts isolates stock-specific (idiosyncratic) alpha while reducing exposure to broad market beta.",
  "edge_source": "Differentiated fundamental research, behavioral mispricings, accounting forensics, channel checks, expert networks, and dispersion in single-stock returns.",
  "typical_holding_period": "1-12 months, with both core and trading sleeves common",
  "typical_leverage": {
    "min": 1,
    "max": 4,
    "typical": 2
  },
  "typical_gross_exposure": {
    "min": 100,
    "max": 300
  },
  "typical_net_exposure": {
    "min": -20,
    "max": 80
  },
  "expected_volatility": {
    "min": 6,
    "max": 14,
    "unit": "annualized-pct"
  },
  "expected_sharpe": {
    "low": 0.4,
    "high": 1.2
  },
  "drawdown_profile": "Drawdowns typically driven by factor reversals (momentum crashes, low-volatility unwinds) and short-squeeze episodes. Peak-to-trough commonly 8-20%.",
  "correlation_to_equities": 0.5,
  "correlation_to_bonds": 0,
  "liquidity_profile": "monthly",
  "instruments_used": [
    "common stock",
    "ADRs",
    "ETFs",
    "single-stock options",
    "index futures"
  ],
  "asset_classes": [
    "equities"
  ],
  "primary_risks": [
    "short-squeeze risk",
    "factor crowding",
    "borrow availability and recall risk",
    "regulatory short-selling bans",
    "concentration risk"
  ],
  "macro_regime_sensitivity": {
    "rising_rates": "Mixed: hurts long-duration growth longs, helps shorts on unprofitable growth.",
    "falling_rates": "Generally favorable for long book; can compress the short book if quality shorts rally.",
    "high_volatility": "Stock dispersion typically rises, expanding the alpha opportunity, though execution costs widen.",
    "low_volatility": "Compressed dispersion narrows the spread between longs and shorts; harder environment for stock-pickers.",
    "recession": "Performance highly manager-dependent; defensive positioning rewards quality bias.",
    "bull_market": "Net-long managers benefit from beta; market-neutral books can underperform if shorts rally with the market."
  },
  "fee_structure": {
    "management_fee": "1.0%-2.0%",
    "performance_fee": "15%-20%",
    "hurdle_rate": "Often none; sometimes T-bill rate or fixed (e.g. 6%)",
    "high_water_mark": true
  },
  "key_metrics": [
    "Sharpe ratio",
    "alpha",
    "long-short attribution",
    "gross/net exposure",
    "factor exposures",
    "hit rate",
    "win/loss ratio"
  ],
  "notable_practitioners": [
    "Julian Robertson (Tiger Management)",
    "Lee Ainslie (Maverick)",
    "John Griffin (Blue Ridge)",
    "Stephen Mandel (Lone Pine)"
  ],
  "exemplar_funds": [
    "lone-pine-capital",
    "viking-global",
    "tiger-global",
    "maverick-capital"
  ],
  "related_terms": [
    "alpha",
    "beta",
    "short-selling",
    "stock-borrow",
    "pair-trade",
    "factor-investing",
    "fundamental-analysis",
    "long-short-equity"
  ],
  "related_strategies": [
    "equity-market-neutral",
    "activist-short",
    "global-macro"
  ],
  "historical_drawdowns": [
    {
      "year": 2008,
      "event": "Global Financial Crisis",
      "estimated_drawdown_pct": -18
    },
    {
      "year": 2016,
      "event": "Quant momentum crash and value rotation",
      "estimated_drawdown_pct": -8
    },
    {
      "year": 2021,
      "event": "Meme-stock short squeeze",
      "estimated_drawdown_pct": -10
    },
    {
      "year": 2022,
      "event": "Growth de-rating",
      "estimated_drawdown_pct": -12
    }
  ],
  "academic_foundations": [
    "Fama-French (1992) three-factor model",
    "Carhart (1997) momentum",
    "Grinblatt & Titman (1989)"
  ]
}