Teton Capital Un-Booked Short Profits Caught In Asian Regulatory Freeze

Technically Teton Capital Partners is down -5% year to date as of June, according to  investor letters reviewed by ValueWalk. This is a relative oddity for the billion dollar  long / short fund. Since 2001 the hedge fund with an 18.8% compounded annual return, run by Kleinheinz Capital “cub” Quincy Lee, has only experienced one negative year. But don’t let looks deceive. Short exposure in the fund where trading was halted could impact performance in a positive way when shares trade again on an open market.

Teton Capital not hooked by China Ocean's fish that got away story

When Teton took a look at the stock of China Ocean, little did they know it would be a “rollercoaster ride” that would “secure a place in the Teton short hall of fame.”

Like most hedge fund research hero stories, the analysis is probing for holes in the consensus thinking.  What first stood out was a profit anomaly.  Teton conducted a relative value analysis that is known to work for stocks as well as in evaluating hedge fund investments. Find the “beta,” used loosely in this instance, and then compare revenues both over and under the given market environment.

In the case of China Ocean, the owner of fishing boats located along the Chinese coast was exhibiting significantly higher profitability per boat than the Chinese fishing boat average. “We found that China Ocean’s vessels had 9x the sales vs. comps, and China Ocean claimed high profits while the comps were losing money or break even at best.”


This content is exclusively for paying members. Sign up here

If you are subscribed and having an account error please clear cache and cookies if that does not work email support@valuewalk.com or click chat

Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Are you an intelligent investor?

ValueWalkPremium is a website and newsletter for smart investors like yourself. We focus on the latest hedge fund industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today for only a few dollars a day and get a 3 day no obligation trial with a targeted 20% discount coupon code.

Cancel anytime during trial and you are never charged.

Limited time offer: For first 50 subscribers