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China-based quantitative hedge fund and AI company From Wikipedia, the free encyclopedia
High-Flyer (Chinese: 幻方; pinyin: Huàn Fāng) is a Chinese hedge fund company incorporated in February 2016.[2] Its legal registration address is in Ningbo, Zhejiang, and its main office location is in Hangzhou, Zhejiang. It is the founder and backer of AI firm DeepSeek.
| |
Native name | 宁波幻方量化投资管理合伙企业（有限合伙） |
|---|---|
| Company type | Private |
| Industry | Hedge fund Artificial intelligence |
| Founded | February 2016 |
| Founders | Liang Wenfeng Xu Jin Zheng Dawei |
| Headquarters | Hangzhou, Zhejiang, China |
Key people | Lu Zhengzhe (CEO) |
| AUM | US$7 billion (October 2024) |
Number of employees | 160 (2021) |
| Subsidiaries | DeepSeek |
| Website | high-flyer.cn |
| Footnotes / references [1] | |
High-Flyer was founded in February 2016 by Liang Wenfeng and two of his classmates 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 10,000 Nvidia A100 GPUs.[10] By this year all of High-Flyer’s strategies were using AI which drew comparisons to Renaissance Technologies.[11]
At the end of 2021, High-Flyer put out a public statement on WeChat apologizing for its losses in assets due to poor performance.[12][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.[12][5] The models would take on higher risk during marker fluctuations which deepened the decline.[12][5] In addition the company stated it had expanded its assets too quickly leading to similar trading strategies that made operations more difficult.[12][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.[13]
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.[14] This organization would be called DeepSeek.[15]
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.[11]
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.[16]
In October 2024, High-Flyer shut down its market neutral products, after a surge in local stocks caused a short squeeze.[17]
High-Flyer's investment and research team had 160 members as of 2021 which include Olympiad Gold medalists, internet giant experts and senior researchers.[18] 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".[19]
In March 2023, it was reported that High-Flyer was being sued by Shanghai Ruitian Investment LLC for hiring one of its employees.[20] 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.[20] In May 2023, the court ruled in favour of High-Flyer.[21]
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" and having "a negative impact on the company's reputation", following a social media accusation post and a subsequent divorce court case filed by Xu Jin's wife regarding Xu's extramarital affair.[22][23]
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