China Hedge Fund Targets Undervalued U.S. And HK Firms

A Chinese hedge fund manager is embarking on a rare activist campaign aimed at boosting returns, as reported by Bloomberg News.

Huakun Ding, the founder of Goldenwise Capital Group, has set his sights on New York-listed GEE Group Inc., acquiring a stake of more than 5% and advocating for change.

Huakun Ding, the founder of Goldenwise Capital Group, has set his sights on New York-listed GEE Group Inc., acquiring a stake of more than 5% and advocating for changes, including a potential sale of the human resources firm.

Since Goldenwise's filing on August 15, GEE shares have surged by 28%.

Ding, who has identified additional targets, including Hong Kong rice firm Golden Resources Development International Ltd., sees this as just the beginning.

Notably, Chinese hedge funds are not widely known for employing aggressive tactics, aside from Ping An Insurance (Group) Co.'s campaign against HSBC Holdings Plc. Globally, activist campaigns are on the rise, reaching a record high in 2022.

In the current year, there have been 541 campaigns launched, with nearly half targeting US companies, compared to 663 campaigns last year, as per Bloomberg data. This year, there have been no campaigns targeting Chinese firms.

Ding shared that he initiated volatility arbitrage trading in 2008 while pursuing a master's degree in financial mathematics at the University of British Columbia.

In 2012, he established Goldenwise Capital Management in Canada before relocating its operations to Hong Kong. Subsequently, he established a mainland business, Goldenwise Capital Group (Shanghai) Ltd., with a focus on undervalued listed companies.

While he is currently targeting firms with market values of up to $500 million, Ding mentioned that he may aim higher as his financial resources expand.

Goldenwise manages approximately $200 million, while the Shanghai-based business handles around 300 million yuan ($41 million), according to his statement.

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