has built his fortune by betting against Chinese companies.
Adrangi was reared in Vancouver and graduated from Yale in 2003. Like many of his generation, he went to Wall Street. In 2009, he set up his own hedge fund, using his own savings and his family’s capital to get started.
In just two years—very bad years in terms of market history—Adrangi has seen his fund surge six-fold and grow to $20 million.
And how did Adrangi accomplish such bullish growth in a bear market? By trashing Chinese companies.
Adrangi finds that many Chinese firms are shells that are worth little if anything. He researches them, then goes short in the market, meaning he agrees to provide stock in the firms at some date in the future at today’s market prices. Then he publicizes what he knows, watches their stock value plummet and pockets the difference between their original valuation and their value after exposure.
The Washington Post recently detailed some of his exposes.
For example, Adrangi targeted China Education Alliance, which he described as “mostly a hoax.” Adrangi checked out the firm’s training center in Harbin, Manchuria, which the company said had 17 modern classrooms for 1,200 students. Photos by people Adrangi sent to Harbin showed the building had no desks and was largely empty. The company boasted of burgeoning online revenues, but Adrangi found its website did not work. Before Adrangi, the company had a market values of $150 million—after Adrangi, it fell to $25 million.
Another example was China Marine, a snack food maker. Adrangi looked at what it was telling American investors about its revenues. Then he checked the company’s filings with China’s State Administration of Industry and Commerce. He found that China Marine told China its revenues were 85 percent less than it was telling Americans.
Adrangi isn’t the only investment manager who is down on the multitude of small Chinese firms that are trying to cash in on the American belief that everything in China is booming. But Adrangi has made a boom out of their bust.
Adrangi was born in Iran. His family moved to California when he was five and then later went on to Vancouver where his father, an engineer, bought a fence company.
Attending a prestigious Canadian boys’ school, Adrangi developed a very lefty political streak, The Washington Post reported. He wrote an article in the Yale Daily News saying his goal was to “stick it to the man and topple the evil capitalist empire”—not a good basis on which to launch a Wall Street career!
He even traveled to Washington to join the often-violent protests against World Bank and International Monetary Fund policies.
But Adrangi said he soon soured on protest and shifted to the right as he studied economics.
