Kerrisdale Capital: How do people react these days if a hedge fund is up 200% in a year? - YouTube

It’s not only Sino-Forest: Beginning in 2004 and particularly from 2006-2009, more than 400 Chinese companies went public in the U.S. through reverse mergers, avoiding the costs and rigorous due diligence involved with registering in the mainland or Hong Kong. Throughout 2010 and 2011, many U.S.-listed Chinese reverse mergers were exposed as frauds, leading to stock halts, auditor resignations and a general decline in the sector. Kerrisdale published research reports on numerous frauds, and benefited as the Bloomberg Chinese Reverse Merger Index (a proxy for this group) fell more than 60% during 2011.

Red flags at U.S.-listed Chinese companies include inflated margins, low-quality auditors, high CFO and auditor turnover, sham acquisitions, related party transactions, etc. “Soft Activism”: Using (social) media to distribute findings. Stock scams also occur in non-Chinese companies, particularly in sectors that lend themselves to “stories”, such as tech, biotech, metals & mining, oil & gas, etc.

How do people react these days to a hedge fund making 200% a year? Kerrisdale's investor base & strategy going forward.