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

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

Looking for a way to keep warm during the cold weather or rather alleviate your cold while under the weather?