What is meant by $$smoothing$$ in regards to hedge fund performance?

When managers value less$-$liquid holdings conservatively during good months and aggressively in bad months to reduce volatility

When managers invest in a wide variety of assets in order to decrease covariance in the portfolio and reduce risk

Hedge fund portfolios that concentrate in a few companies and specialize in those company$$s industry

Smoothing is not a hedge fund term; it is a private equity term