Citing an investor newsletter, Bloomberg News reported that the Dalton Greater China Fund has outperformed peers with a 25% return this year. The fund is managed by James Rosenwald III, who formerly advised funds linked to George Soros.
In the first 10 months of this year, Dalton Greater China Fund beat the Eurekahedge Greater China Long-Short Equities Hedge Fund Index by nearly 10 percentage points. In an emailed response to questions from Bloomberg News, the fund's Co-Manager Tony Hsu said the performance of their USD 64 million fund was driven by bets placed on Himax Technologies Inc, a Taiwan-based technology firm, as well as bets placed on property developers in Hong Kong. Hsu heads the fund's Shanghai office. He formerly worked for Foxconn International Holdings and Goldman Sachs Group Inc.
Hsu added that Dalton Greater China Fund had concentrated its investments on companies headed by entrepreneurs and away from enterprises controlled by the state. Hsu said, "We own a number of entrepreneurial-led companies where there is strong alignment of interests between the management and shareholders. At state-owned enterprises, the senior executives are placed into these management roles by the state and typically have no ownership in the companies they run."
Bloomberg reported that Chinese stocks listed in Hong Kong have lagged in the MSCI World Index in the past three of the last five years based on the Hang Seng China Enterprise Index. In the past three out of the past five years, meanwhile, the Eurekahedge Greater China Long-Short Equities Hedge Fund Index underperformed the global industry index based in Singapore.
The Himax investment was one of the fund's most profitable trades this 2013. Hsu stated that Dalton started purchasing Himax shares for about USD 1 two years ago. On October 2, the Taiwan-based firm's American Depositary Receipts traded for USD 11.02. The report added that Google Inc would be buying a 6% stake in Himax.
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