IPO Report - LFT, FUQI, Arbitrage and More

ChinaIPO (CI) has recommended LFT and FUQI a few while ago, both of them are doing well.
FUQI has gone up 15% in the first hour of trading:


And LFT kept 23% of gain on Wednesday (Oct. 24, 2007):



What CI has explored was the reverse strategy of IPO Arbitrage (sounds like a hedge fund, huh?). Statistically, IPO should be sold, but recently Chinese IPOs buck the trend according to some undisclosed research as saying.

Dictionary___

IPO: Initial Public Offering

Hedge Fund: An aggressively managed fund that uses advanced investment strategies (called argitrage) to avoid risk (the original intention, that's why it's named as hedge, but the strategies they are using are sometimes so aggressive, the hedge does not mean anything any more). Unlike the regular fund, they can buy long and sell short (often done at the same time) and use leverage (use derivative instrument such as options). The managers are paid by charging managing fees (like the normal mutual) and up to 20% performance incentives (no mutual can do so). The regular mutual fund is intended to beat the index (here it goes, the game is called SEEKING ALPHA - sounds familiar?). For instance, if general market is down by 10% and you are only down 5%, you are a hero. But that's not for hedge, a hedge needs to be consistently making money in both bull and bear market (by shorting).

More Hedge fund stories will follow.

Have fun,

Market Swimmer

such as leverage, long, short and derivative positions in both domestic and international markets with the goal of generating high returns