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High-Flyer (company)

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High-Flyer Quant Investment Management (Ningbo) L.P.
Native name
宁波幻方量化投资管理合伙企业（有限合伙）
Company typePrivate
IndustryHedge fund
Artificial intelligence
Founded2015; 10 years ago (2015)
FoundersXu Jin
Zheng Dawei
Liang Wenfeng
HeadquartersHangzhou, Zhejiang, China
Key people
Lu Zhengzhe (CEO)
AUMUS$7 billion (October 2024)
Number of employees
160 (2021)
SubsidiariesDeepSeek
Websitehigh-flyer.cn
Footnotes / references
[1]

High-Flyer (Chinese: 幻方; pinyin: Huàn Fāng) is a Hangzhou-based hedge fund and artificial intelligence (AI) company founded in 2015. It is one of the largest quantitative funds in China.[2]

It is the founder and backer of AI firm DeepSeek.

History

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High-Flyer was founded in 2015 by three engineers from Zhejiang University.[3][4][5] They generated ideas of algorithmic trading as students during the 2007–2008 financial crisis.[3][4][5] The company has two AMAC regulated subsidiaries, Zhejiang High-Flyer Asset Management Co., Ltd. and Ningbo High-Flyer Quant Investment Management Partnership LLP which were established in 2015 and 2016 respectively.[3][5] The two subsidiaries have over 450 investment products.[5]

In 2016, High-Flyer experimented with a multi-factor price-volume based model to take stock positions, began testing in trading the following year and then more broadly adopted machine learning-based strategies.[4]

In 2019, High-Flyer set up a SFC-regulated subsidiary in Hong Kong named High-Flyer Capital Management (Hong Kong) Limited.[6] It was approved as a Qualified Foreign Institutional Investor one year later.[7][8] In the same year, High-Flyer established High-Flyer AI which was dedicated to research on AI algorithms and its basic applications.[9]

In 2020, High-Flyer established Fire-Flyer I, a supercomputer that focuses on AI deep learning.[5][7] It cost approximately 200 million Yuan.[5][7] In 2021, Fire-Flyer I was retired and was replaced by Fire-Flyer II which cost 1 billion Yuan. It contained over 10,000 Nvidia A100 GPUs.[8] By this year all of High-Flyer’s strategies were using AI which drew comparisons to Renaissance Technologies.[10]

At the end of 2021, High-Flyer put out a public statement on WeChat apologizing for its losses in assets due to poor performance.[11][5] The performance of over 100 of its investment products declined by over 10%.[5] High-Flyer stated that its AI models did not time trades well although its stock selection was fine in terms of long-term value.[11][5] The models would take on higher risk during marker fluctuations which deepened the decline.[11][5] In addition the company stated it had expanded its assets too quickly leading to similar trading strategies that made operations more difficult.[11][5] Up until this point, High-Flyer produced returns that were 20%-50% more than stock-market benchmarks in the past few years.[5]

In March 2022, High-Flyer advised certain clients that were sensitive to volatility to take their money back as it predicted the market was more likely to fall further.[12]

In April 2023, High-Flyer announced it would form a new research body to explore the essence of artificial general intelligence. However it would not be used to perform stock trading.[13] This organization would be called DeepSeek.[14]

From 2018 to 2024, High-Flyer has consistently outperformed the CSI 300 Index. However after the regulatory crackdown on quantitative funds in February 2024, High-Flyer’s funds have trailed the index by 4 percentage points.[10]

In July 2024, High-Flyer published an article in defending quantitative funds in response to pundits blaming them for any market fluctuation and calling for them to be banned following regulatory tightening. High-Flyer stated it held stocks with solid fundamentals for a long time and traded against irrational volatility that reduced fluctuations.[15]

In October 2024, High-Flyer shut down its market neutral products, after a surge in local stocks caused a short squeeze.[16]

Corporate affairs

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High-Flyer's investment and research team had 160 members as of 2021 which include Olympiad Gold medalists, internet giant experts and senior researchers.[17] It has been trying to recruit deep learning scientists by offering annual salaries of up to 2 million Yuan.[4]

In 2022, the company donated 221 million Yuan to charity as the Chinese government pushed firms to do more in the name of "common prosperity".[18]

In March 2023, it was reported that High-Flyer was being sued by Shanghai Ruitian Investment LLC for hiring one of its employees.[19] The rival firm stated the former employee possessed quantitative strategy codes that are considered "core commercial secrets" and sought 5 million Yuan in compensation for anti-competitive practices.[19] In May 2023, the court ruled in favour of High-Flyer.[20]

In October 2023, High-Flyer announced it had suspended its co-founder and senior executive Xu Jin from work due to his "improper handling of a family matter".[21]

See also

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References

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  1. ^ "私募基金管理人公示 - 中国基金业协会". gs.amac.org.cn.
  2. ^ "遥遥领先，量化私募"新四大天王"出炉，头部集团颠覆在即". 36kr. 28 September 2023. Archived from the original on 15 March 2024. Retrieved 5 January 2025.
  3. ^ a b c "百亿幻方量化规模爆增的后遗症|界面新闻". www.jiemian.com (in Chinese). Archived from the original on 28 February 2023. Retrieved 1 March 2023.
  4. ^ a b c d "Billions Going to China's Quants Takes Fight to Global Funds". Bloomberg News. 31 May 2020. Archived from the original on 25 May 2022. Retrieved 1 March 2023.
  5. ^ a b c d e f g h i j k l Feng, Rebecca. "Top Chinese Quant Fund Apologizes to Investors After Recent Struggles". WSJ. Archived from the original on 28 February 2023. Retrieved 1 March 2023.
  6. ^ "顶流量化私募集体出手！拿下这一牌照_财经_中国网". finance.china.com.cn. Archived from the original on 1 March 2023. Retrieved 1 March 2023.
  7. ^ a b c "起底私募"新通道"，幻方量化"曲线玩法"揭开盖子". 163 (in Chinese). Archived from the original on 28 February 2023. Retrieved 28 February 2023.
  8. ^ a b 财联社 (29 January 2021). "幻方量化"萤火二号"堪比76万台电脑？两个月规模猛增200亿". Sina. Archived from the original on 1 March 2023. Retrieved 1 March 2023.
  9. ^ Ottinger, Lily (9 December 2024). "Deepseek: From Hedge Fund to Frontier Model Maker". ChinaTalk. Archived from the original on 28 December 2024. Retrieved 28 December 2024.
  10. ^ a b McMorrow, Ryan (9 June 2024). "The Chinese quant fund-turned-AI pioneer". Financial Times. Archived from the original on 10 June 2024. Retrieved 19 July 2024.
  11. ^ a b c d "China's Top Quant Hedge Fund High-Flyer Apologizes for Loss". Bloomberg News. 29 December 2021. Archived from the original on 5 December 2022. Retrieved 1 March 2023.
  12. ^ "Quant Giant's Rare Advice to Pull Cash Shows China Market Woes". Bloomberg News. 15 March 2022. Archived from the original on 31 March 2022. Retrieved 6 January 2025.
  13. ^ "[Exclusive] Chinese Quant Hedge Fund High-Flyer Won't Use AGI to Trade Stocks, MD Says". Yicai Global. Archived from the original on 31 December 2023. Retrieved 31 December 2023.
  14. ^ Ottinger, Lily (9 December 2024). "Deepseek: From Hedge Fund to Frontier Model Maker". ChinaTalk. Archived from the original on 28 December 2024. Retrieved 27 December 2024.
  15. ^ "China Quants Defend Sector Amid Calls to Ban Algorithmic Trades". Bloomberg News. 19 July 2024. Retrieved 6 January 2025.
  16. ^ "Top China Quant Winds Down Strategy Pummeled by Market Rally". Bloomberg News. 21 October 2024. Retrieved 21 November 2024.
  17. ^ "China Hedge Funds Pay $300,000 to Beat Wall Street to Best Graduates". Bloomberg News. 31 August 2021. Archived from the original on 15 September 2021. Retrieved 28 February 2023.
  18. ^ "China Quant Fund Donates $53 Million as Xi Stresses Philanthropy". Bloomberg News. 11 January 2023. Archived from the original on 16 March 2024. Retrieved 28 February 2023.
  19. ^ a b "Hedge Fund Feud Over China Quant Trader Shows Growing Talent War". Bloomberg News. 7 March 2023. Archived from the original on 9 March 2023. Retrieved 7 March 2023.
  20. ^ "China Hedge Fund Loses Case Against Top Quant Who Joined Rival". Bloomberg News. 25 May 2023. Archived from the original on 16 March 2024. Retrieved 31 December 2023.
  21. ^ Zhen, Summer (27 October 2023). "Top China hedge fund suspends founder, cites reputational hit from family matter". Reuters.
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