From a risk management perspective yes. Many hedge funds are...

From a risk management perspective yes. Many hedge funds are highly concentrated, betting everything on 1 or 2 positions. You hear a lot about the successes - from George Soros shorting the pound with his entire fund, or Michael Burry (Scion Capital), Steve Eisman (Frontpoint) betting their respective entire funds on subprime mortgages unwinding. But you hear little about the failures - i.e Pershing Square losing more than half of its capital on a single Valeant Pharmaceuticals position etc. The reality is that funds that have highly concentrated (<10 positions) rarely do well, and especially if those positions are shorts.

I would much rather have an investment drawdown be explained by sector wide rotations, rather than a couple large positions unwinding. Out of favour sectors always come back in favour, whereas investment mistakes with singular concentrated positions are often irreversible.

You can't judge a position to be 'wrong' just because the market has been disagreeing with it for a few months. If you believe that markets are 100% efficient you should be investing in index funds. On the other hand if you don't believe that markets are efficient, then the conclusion follows that markets deviate from intrinsic value occasionally for possibly extended periods of time, causing pain for investors that have not jumped on the next bandwagon (nickel boom in the 70s, corporate raiders in the 80s, iron ore, lithium, telcos, pizzas, milk?! etc). But remember - reversion to the mean is inevitable. Yes, growth funds such as Bennelong, SGH, Hyperion etc have performed well over the past decade, that doesnt necessarily mean that they have been right, or wrong - and investors seem to have short memories in forgetting that during the GFC each of them had 60+% investment drawdowns.

Nothing prevents you from trying to 'time' funds. But the odds are against you. When Peter Lynch ran Fidelity's Magellan fund, returns averaged 29% over nearly 2 decades. But the average investor in the fund lost money - for capital flowed in when the fund was up, and immediately exited when the fund was down.