Banking & Finance

Stock picker

Who is this investment guru?

Stock picker

Chen Shou-hong, a fund manager with Guosen Securities Asset Management, a Shenzhen-based investment firm, didn’t always have the Midas touch. In 2003, the magazine New Fortune named Chen the best analyst in the energy sector. But four years later, he switched career to the buy-side and his fund’s performance was so poor that Investor Journal called Chen the “worst fund manager,” says Hong Kong’s Apple Daily.

More recently, media sources have claimed Chen’s predictive powers are back in full swing. He is widely believed to be behind China’s most talked-about financial forum called Guru Club, which has developed a reputation for turning its every Hong Kong stock-pick into gold.

Take Global Link Communications. The company’s shares closed 69% higher in April, after Guru Club released a report saying that the stock was undervalued. Huiyuan Juice, a beverage maker, also soared 80% when Guru Club said the stock is “a pearl being priced as a cabbage”. This Monday, GDC Technology, a computer graphics firm, also saw its shares up 61.8% after Guru Club talked up its value the day before.

The research reports published by the Guru Club are available to the public to download for free on WeChat, Tencent’s popular mobile messaging platform.

It is not difficult to grasp why the forum is so popular: the analysis is easy to understand and at the moment, there is a huge appetite to chase Chinese stocks.

Still, industry observers say Chen could be operating in a grey area since all the reports are actually published under the pseudonym Gelong. Moreover, disclaimers are practically non-existent. In all of the research reports, the author doesn’t reveal whether or not he holds any of the stocks he is writing about.

“As a buy-side fund manager, he so freely offers his assessment on a public platform, one can’t help but suspect that he is purposely trying to talk up the stocks,” one industry veteran told Caixin Weekly.

Some analysts say the club has had a positive impact on the city’s bourse. “If it wasn’t for Guru Club, there wouldn’t have been such a large influx of mainland money pouring into the Hong Kong stockmarket,” one told the Apple Daily.

So far Hong Kong’s securities watchdog has not commented on Guru Club.

However, will the postings soon dry up? That’s possible: when another WeChat user alleged a couple of weeks ago that Gelong was in fact written by Chen, the fund manager subsequently resigned from Guosen Securities, reports Apple Daily.

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