I'd agree with you to a large extent; a better, more precise way to put it would be to say that long/short equity hedge funds have to be engaged in de facto insider trading* in order to consistently generate enough alpha to attract investors. It's just too hard to consistently be smarter than the market on both your long and short bets, especially when it's a larger cap stock whose float has constant inflows and outflows of institutional capital.

That said, there are other asset classes which, ipso facto, do not lend themselves to insider trading, such as commodities and distressed debt. And there are definitely many traders in these spaces who consistently post outsized returns, which is why they get paid so much.

* I include in this definition not just stuff that will get you sent to jail, such as solicitation of MNPI from company employees, but also the more gray-area tactics commonly used by long/short analysts. Chief among these is speaking to "industry consultants" who give traders their "personal perspective" on certain companies, which in other words means paying them to relay the gossip they hear from their loose-lipped friends who work at various publicly traded companies.