At odds with China bears, this hedge fund ranks among the best in Asia

By working against the short side, Lu Yi's fledgling hedge fund became one of Asia's brightest stars in 2017, Bloomberg reported.

Lu Yi, a Hong Kong-based founding partner, said Parantoux Capital's fund had a 65 per cent return on investments in targets such as AAC Technologies Holdings Inc. in the year to September. The stock tumbled in May after short sellers released a report. The fund has also made money from long real estate developers China Evergrande Group and Sunac China, which have risen fivefold so far this year. The fund, which manages about $55 million in assets under management, is betting on stocks in both short and long positions around the world.

Unlike bears betting on a hard landing, a credit crunch and the bursting of the property bubble, Lanteng Capital, a Chinese-born hedge fund, takes the opposite view and profits from it. Shares in mainland China and Hong Kong have soared, driving equity hedge funds in Greater China up an average of 24% this year, almost three times the returns of their global peers, according to Singapore-based Eurekahedge Pte. Lanteng Capital ranks among the top five Asian hedge funds in terms of performance.

Mr Lu said AAC Technologies Holdings Inc. 's share price could double within a year because the company had invested heavily in research and development and expanded its business into the manufacture of mobile camera lenses. Headquartered in Shenzhen, AAC Technologies Holdings Inc. makes mini speakers and microphones for smartphones made by companies such as Apple Inc.

'AAC Technologies Holdings Inc. is the strongest manufacturer in the smartphone supply chain and has a very deep technology drive, but obviously the market doesn't see it, 'Mr. Lu said in an interview.