New Hedge Fund Bets Worst Is Over For U.S.-Listed Chinese Cos.

Jun 25 2013 | 10:24am ET

An old China hand is set to launch a hedge fund investing in Chinese companies listed in the U.S.

Paul Conway is seeking about US$60 million for his China Revaluation U.S. Fund. His thesis is simple: China bears like Muddy Waters' Carson Block have already taken out most of the allegedly fraudulent Chinese firms listed in North America, leaving behind about 150 strong—and undervalued—businesses.

"I have seen everything: the good, bad and ugly of China," Conway told Reuters. "And I am still extremely encouraged."

From 2010 through last year, some 70 Chinese companies trading on U.S. markets were hit with class-action lawsuits, seeing their market-capitalizations plummet by US$26.5 billion. And that doesn't include the most spectacular Western-listed Chinese implosion, that of Sino Forest Corp., whose shares cratered after Block accused the firm of overstating its timber holdings in China. Sino Forest, which was listed in Canada, cost hedge fund Paulson & Co., once one of its largest shareholders, hundreds of millions of dollars.

In addition, a new agreement between the U.S. and China will give regulators access to Chinese companies' audit documents.

"A lot of companies went public that shouldn't have," Conway said.

The new fund, managed by Fidelity Investments veteran Paul Jackson, will invest in between 15 and 20 stocks. Conway, a former Oppenheimer & Co. banker who does not speak Mandarin, has also brought on Chien Lee, co-founder of China's 7 Days Group Holdings hotel chain; Paul Keung, another Oppenheimer veteran; and Eddie Woo of Mascotte Holdings. The latter two will serve on China Revaluation's advisory board.


In Depth

JOBS Act Propels Real-Estate Crowdfunding Platform

Oct 21 2014 | 2:57am ET

If D.J. Paul were a real estate development, he would be described as “multi-use...

Lifestyle

Balyasny Pays Over $6M For Lakefront House

Oct 22 2014 | 10:29am ET

A venture headed by hedge fund manager Dmitry Balyasny just paid $6.2 million for...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.