The Number One: He’s outperformed all other hedge funds so far this year, but now he’s got most of his portfolio in cash

The Number One: He’s outperformed all other hedge funds so far this year, but now he’s got most of his portfolio in cash

2 Nov    Finance News

Chinese education stocks have paid off big for QQQ Capital.

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Just a few years ago, Qian Yongqiang was running his own money. Now, after riding a wave of big wins in the stock market, his explosive hedge-fund finds itself on the top of the world and sitting on a wad of cash ahead of next week’s U.S. election.

No doubt, it’s been a stellar year for Qian’s QQQ Capital Management hedge fund , which has navigated all the coronavirus volatility to post a 275% return for investors through September.

In fact, according to Eurekahedge data, no other fund has done better.

What’s the secret to the his success? He takes an extremely concentrated approach, with more than a third of his fund’s assets invested in Chinese education companies. His picks have surged this year, even as, according to Bloomberg News, they’ve been smacked with fears of regulatory crackdowns and allegations of accounting fraud.

Shares of New Oriental Education EDU, -3.12%, for instance, have risen by almost a third over the past year, while GSX Techedu GSX, -3.59% has jumped almost fourfold and TAL Education Group TAL, -0.82% has tacked on 55%. Qian, with his team of six overseeing the fund’s $1 billion in assets, has also dabbled in Tesla TSLA, -5.54%, one of this year’s tech juggernauts.

“When we invest, we know everything about an industry, its top five people, their personality, their weakness, their greatness, everything about them,” he told Bloomberg News in an interview.

But he’s been taking his foot off the risk pedal lately, moving to 55% cash in an effort to guard against upheaval in the coming weeks.

Cash has, indeed, been a good place to be lately. The Dow Jones Industrial Average DJIA, -0.59%  closed 6.5% lower for the five-day stretch last week, while the S&P 500 SPX, -1.21%  lost 5.6% and the tech-heavy Nasdaq Composite COMP, -2.45%  gave up 5.5%. At last check, stocks were poised for a green opening Monday, as futures on the Dow YM00, +0.32% were up slightly.

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