Hedge Funds’ Favorite Chinese Reverse Merger Stocks

Bloomberg published the list of Chinese reverse merger stocks. These stocks are performing terribly this year and recently SEC issued a warning about the Chinese reverse merger companies. “Given the potential risks, investors should be especially careful when considering investing in the stock of reverse merger companies,” said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy. “As with any investment, investors should thoroughly research the company – including ensuring there is accurate and up-to-date information – before making a decision to invest.”

PAULSON & CO

We compiled the list of Chinese reverse merger companies that are favored by hedge funds and prominent investors. Of course, it is possible that these hedge funds didn’t do their homework on these reverse merger stocks and blindly bought them to gain some China exposure. Recently billionaire hedge fund manager John Paulson lost between $600-$650 Million in a Chinese company. So, investors have to be careful.

Here are the top Chinese reverse merger companies with at least 4 hedge funds investing a total of $10 Million:

Stock Ticker No of Funds Value (x1000)
ChinaCast Education CAST 12 88163
Harbin Electric HRBN 10 49602
Cogo Group COGO 8 37804
Sinovac Biotech SVA 4 22387
Yuhe International YUII 5 21216
Zhongpin HOGS 9 16489
Wonder Auto Technology WATG 8 11500
Jinpan International JST 4 11250

ChinaCast Education tops our list with 12 hedge funds holding $88 Million in CAST. Quincy Lee’s Teton Capital, Jeffrey Tannenbaum’s Fir Tree, Chase Coleman’s Tiger Global, and John Burbank’s Passport Capital are among the CAST investors (See the complete list of hedge funds in CAST).

Harbin Electric (HRBN) is the second most popular Chinese reverse merger stock. Philip Hempleman’s Ardsley Partners made a large bet on HRBN. Matthew Halbower’s Pentwater Capital had a $26 Million long position in HRBN as well. However, Halbower also had a $33 Million put option.

On the other hand, there aren’t any hedge funds in any of the following Chinese reverse merger stocks:

Aoxing Pharmaceutical AXN
China Auto Logistics CALI
China Botanic Pharmaceutical CBP
China CGame CCGM
China Fire & Security Group CFSG
China HGS Real Estate HGSH
China Infrastructure Investment CIIC
China Nutrifruit Group CNGL
China Pharma Holdings CPHI
China Recycling Energy CREG
China Shengda Packaging Group CPGI
ChinaNet Online Holdings CNET
Cleantech Solutions International CLNT
Dehaier Medical Systems DHRM
Ever-Glory International Group EVK
Feihe International ADY
Guanwei Recycling GPRC
Jiangbo Pharmaceuticals JGBO
Jingwei International JNGW
NF Energy Saving NFEC
Shengkai Innovations VALV
Skystar Bio-Pharmaceutical SKBI
THT Heat Transfer Technology THTI
Tianli Agritech OINK
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