There are lots of different strategies utilized by hedge funds today. Each strategy fits a different type of investment appetite and philosophy. But the first hedge fund launched in 1949 by Alfred Winslow Jones used a long/short equity strategy. It remains a very common strategy today.
Today some of the hedge funds that offer a long/short equity strategy according to HedgeLists include Point72, Bridgewater Associates, Two Sigma, Viking, Lighthouse, Stone Point, Holocene Advisors, and many more.
Introduction to Long/Short Equity
It might seem as simple as buying a stock expected to rise and selling or shorting a stock expected to fall. But it is more about strategy. Instead of just basic long and short investing, the strategy aims to profit from individual mispriced equities while reducing overall market risk.
This isn’t the same as a market-neutral strategy where long positions equal the short positions. It can involve being long on one stock, while shorting an index or ETF to hedge similar market exposure. It can also involve shorting competitors of the desired long stock to spread the risk. Or a combination of all of them.
In 2024 hedge funds, specializing in long-short stock trading achieved their highest average returns since 2020, according to a report by Reuters. The returns averaged at 12.75 percent, a big improvement on the same results in 2023.
We spoke to Christian Putz, Founder, CEO and Portfolio Manager at ARR Investment Partners to find out more.
ARR’s Track Record in Turbulent Markets
ARR Investment Partners is a London-based investment boutique specialising in advising a global long/short equity strategy. The strategy was launched in 2015 and is tailored for professional investors. Christian kicked off the conversation by explaining how the best monthly performance that his strategy had delivered so far was during the market crash that followed the outbreak of the pandemic in 2020.
A few years later, in 2022, when Russia invaded Ukraine, Christian shared how his investors earned double-digit percentage returns by being both long and short on certain investment themes such as shipping, defense, and renewable energy. For the year 2022, BarclayHedge, a database for alternative investment performance data, listed ARR among the top 10 long/short equity strategies globally.
In March 2025 BarclayHedge again recognized ARR’s returns. This time the firm was listed in the Top 10 global long/short equity strategy net return for March. It was seventh overall. Those are not the only times that ARR has been recognized.
Christian has worked in Russia before launching the ARR global l/s equity strategy. His grasp of geopolitics is exceptional. So is the logic with which he sees the market. He doesn’t necessarily think that dramatic events like the pandemic, the invasion of Ukraine, or Trump’s tariffs are Black Swan events given that they have been known weeks or months before they caused a market crash.
He explained, “you don’t need a sophisticated AI model to predict what will happen.” Savvy investors know that these events have an impact. But this impact is related to how you maintain your portfolio, how you allocate assets and how you continue focusing on the long term. It’s about market behaviour and psychology.
Navigating Market Downturns with Shorting
Things have changed in the market today. The basic process of shorting remains the same. There are many companies that have been affected by geopolitics or the change in U.S. administration. The recent market downturn showed that major companies like Tesla saw share prices drop over 50 percent in Q1 2025. Tesla wasn’t the only one. Google’s Alphabet, Nvidia, and Apple have also had a volatile 2025 so far.
In a market like this ARR’s investment strategy excels. Not only can the firm generate positive returns from shorting specific stocks, but the cash received from short selling also receives an attractive interest in the current favorable interest rate environment. ARR’s investment strategy also includes using index futures to neutralize risk in dramatic market events.
We moved to discuss the wider market. It was interesting to hear Christian’s view on bonds. It was cautious. The increase of debt levels in the U.S., France, the UK, and other countries has become unsustainable and there might be a tipping point in the future, he believes. This means that the traditional behaviour of markets can change. The classical 60:40 bond equity portfolio does not provide the same protection as historically. This was best shown in 2022 when both equity and bond markets crashed. He reiterated that ARR’s returns outperform those typically available from bonds during uncertainty, citing the fund’s performance in 2020 and 2022. And, as debt levels continue to concern investors, generating alpha from shorting stocks and indices is ARR’s preferred investment strategy in times of uncertainty.
The Power of PARIS: ARR’s Quantamental Edge
PARIS is ARR’s proprietary system. It screens and identifies thousands of daily investment opportunities that align with the firm’s core patterns: Rebound, Dynamic Profit Growth, Bubble, and Structural Losers. These ideas are further vetted through fundamental analysis to understand their business drivers.
“Investing is a whole process,” Christian shared. “You want to break it down into little steps, then automate and optimize as much as possible.”
“This is why we created PARIS. Because we have specific technical criteria, and specific fundamental criteria we look for. We decided to build our own system to capture those opportunities,” he added.
The system has evolved over time, he continued. It covers all the steps from the investment process. The system has more than 200 functions that include backtesting, screening, live monitoring of risk factors affecting the portfolio, post trade analysis, position sizing. Almost everything.
Over time, as the amount of data in the system increases, a quantitative analysis can be made. It allows ARR to become better over time.
What Makes ARR Unique
There are many hedge funds and other investment opportunities available in the market. ARR stands out. Christian emphasized that the fund delivers attractive returns for investors, but what truly sets it apart from other hedge funds is its ability to generate positive returns during market crashes—a feat it has historically often achieved.
The firm deploys one strategy for multiple investors via managed accounts. Investors are given full transparency of their assets.
Christian added how apart from delivering positive returns when markets crash, the other important thing is the people he works with. Especially his team. Working in a strong and engaged team with strong relationships with investors is at the heart of who Christian is.
One thing about the future is certain. There will be ups and there will be downs. And when there will be downs there will be strategies like the one used at ARR Investment Partners that will deliver positive returns.
Author: Andy Samu
#Quantamental #LongShort #HedgeFunds #Performance #Alpha #Strategy
See Also:
ARR proudly won the “With Intelligence HFM European Performance Awards 2024” in the category Global Equity Under $500m. More information can be found here
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