Okay let me clear this debate (longer post but needed). As someone who’s worked at market-neutral L/S pods and at a 40-ticker LO fund - I can safely say both are retarded ways to invest and both sides can stfu. The only true (and correct) way to invest is one that champions flexibility and adaptability whereby the PM is free to make directional bets with varying levels of concentration, turnover, net exposure, and leverage. This set up has increasingly become rare, but is the only path for the best investors. Pods and LOs are alike are constructed in a way to obscure the mediocrity and downright incompetence of the vast majority of institutional active managers. What do you do when 90% of people in an industry are shit at their jobs? You create these institutional constraints to convince LPs they need you and excuse underperformance. It’s no surprise passive has taken majority share. L/S pods are retarded because stock prices don’t move on fundamentals over the short term, yet pods are comped on daily P&L and have no ability to have 1-2 year duration for when the fundamentals do matter. Hence a big disconnect between theory and application. You want market neutral? Stick with FX, commodities, or quant. But stop pretending your “deep fundamental research” will consistently work in a portfolio that is a hodgepodge of beta and factor hedges with very high turnover and strict volatility limits. In other words the pod style is literally fugazi and everyone is just praying each day random price movements don’t zero them out. LO mutual funds are equally as retarded on the other end of the spectrum. Pure beta exposure with performance that is consistently below their index. Most of these managers can’t pick winning stocks because they think emulating fundamental analysis 101 gives them the right to generate alpha. You want to outperform via quality? Yeah, get in line next to the other thousand managers. What’s worse - if you want to outperform via quality then you need much higher degree of portfolio concentration and much higher time horizon. Living by annual performance with 40 tickers that seldom change simply won’t cut it.