Hedge Fund With 138% Gain Says China Shorts Easier to Spot

(Bloomberg) Hao Capital Management, whose Greater China-focused hedge fund returned 138 percent this year, said it is easier to identify targets to wager against among yuan-denominated China stocks than to spot those with the potential to rise.

Many of the nation’s industries are plagued by overcapacity, which will lead to slower cash flow growth for companies with A shares listed in China, the manager of the $268 million hedge fund wrote in its October newsletter to investors. The hedge fund, which bets on rising and falling stocks and didn’t mention any specific industries or shares, wrote that companies with strong cash flows are unlikely to see valuations drop to lows seen in previous years.

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