SPECIAL TREATMENT (ST) A shares - a category of shares which have abnormal financial conditions and given 'special treatment' on the stock exchange - have caused Mr. Wang Yawei's stock to rise with his bosses at Huaxia Fund Management Co Ltd. (For more on the meaning of 'special treatment' shares, click here)
That is because the executive at the influential fund has netted millions for his firm, with a more than 500% ROI to boast of on some counters, exceeding 70 mln yuan for one pick alone.
Mr. Wang is deputy general manager at the unit of well-known asset management firm Huaxia and his ST picks amid market volatility in China have paid off with enviable returns.
Most noteworthy is Jiangxi Changhe Automobile Co (SHA: 600372) which makes both aerospace products and finished automobiles.
The Shanghai-listed firm resumed public trade on the market this week after having its shares restricted from trade for nearly a year and a half for three years of consecutive losses.
It was a considered risk for A-share investors, but as Mr. Wang proves, not a wholly unjustified hazard to manoever.
And for patient holders of Changhe Auto shares, the wait was well worth it.
Changhe Auto’s shares were frozen on the Shanghai bourse in May 2009 for the recurrent loss violation applicable to listed firms before being thawed up briefly earlier this year.
This week the automaker's valuation jumped 140% the instant it left the parking lot.
And as the week unfolded, the stock steadily downshifted and gradually increased in valuation with each session, closing the week up some 200% at 22.42 yuan.
SinaFinance said that if Huaxia Fund's Mr. Wang Yawei were to cash in his chips at this point, he would earn his clients a cool 70 mln plus yuan, not bad for a recently shunned stock.
His foresight to bolster holdings of general and select grade client funds into Changhe during a brief window in the first quarter this year after having built a position in the automaker and avionics firm earlier resulted in the windfall investment returns this week.
The report cited an analyst familiar with Mr. Wang's investment portfolio as saying that the deputy general manager first netted the shares at around 5-6 yuan per share.
Huaxia's Select Fund targeting mainboard A-share listcos at the time picked up over six mln shares of Changhe stock, and the Huaxia Strategic Select Fund bought another three mln.
This made the two associated Huaxia funds the second and third largest public shareholders of the firm.
A conservative estimate would mean Mr. Wang's investments on behalf of Huaxia in Changhe Auto would have already risen in value by over 500%, surpassing 70 mln yuan!
"As for shares undergoing transformation or transitional consolidation, there is a tremendous amount of competition among a massive number of domestic brokerages to get a bead on them early… first if at all possible," Mr. Wang said.
"After all, depressed valuations or restricted share issues in theory hold the most potential for a breakout. How do I usually discover them? I have never relied opon 'inside' information as to be honest, in this competitive industry, to hear a tip from a rival is more likely to be 'disinformation', uninformed or intentionally misleading.
"Therefore the principle that I adhere to is threefold: I only rely on tips from publicly disclosed information, reasonable estimates and forecasts, and consensus advice from clients."
The report added that Mr. Wang also did very well for himself recently with Chongqing Fuling Electric Power Ind Co (SHA: 600452), Yueyang Xingchang Petro-Chemical Co Ltd (SZA: 000819), Petrochina Co Ltd (SHA: 601857) and Shenzhen Nanguang (SZA: 000043).
However, not all ST stocks were success stories for Mr. Wang.
One that failed to slip under Mr. Wang's radar is Liaoning Baike Group (Holding) Co Ltd (SHA: 600077), but it did not end so well for him.
The Shenyang-based steel product logistics firm had its shares restricted from trade on the Shanghai mainboard following its restructuring plan implemented in December 2009.
A significant tranche of additional shares were proposed for flotation to fund asset restructuring, and the recent share price slipped to below his purchase price, causing Mr. Wang to pull both affiliated Huaxia funds out of Baike and cut his losses while there was still time.
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