• Ernie Diaz

Leave Them Kid Stocks Alone

Last Friday, Bill Hwang, awash in leverage from Morgan & Goldman, triggered a $30b liquidation event that included quite a few China tech stocks.

Hwang is mentee of hedge-fund hero Julian Robertson, btw, so fingers must remain pointed at Wall Street for blame. Not that blaming will help in recovery of the many Chinese education stocks which took a tumble, after Hwang unloaded a bundle of GSX Techedu.

Fact is, such stocks were already troubled by rumors of an impending regulatory crackdown on such homework and test-prep companies. It is quite reasonable to assume such a crackdown is coming: the proliferation of such companies has led to steadily declining quality, mounting false claims, and exploitation of tutors, all for that ultimate reward of a public listing.

“Even if it’s bad for ed-tech stocks right now, long-term, this regulation will be good for the industry,” says Jimmie Jeremejev. “Chinese parents’ mania for tutoring is not being capitalized on, it’s being exploited, as are a growing number of teachers, by companies that value short-term profit over a viable organization. So we’re risk off all China ed-tech currently.”

8 views0 comments

Recent Posts

See All

Let's tick off all China's bad news, before getting to the good news. Good news, that is, for investors looking to diversify their global portfolios. Not so good for Gordon Chang and other patient app

Like Hollywood, the western press is invested in narratives and emotional manipulation. Unlike Hollywood, that press has no compunction about skipping the third act of a story, if it doesn't fit that

Politics makes shortchanged bedfellows. As we've written before and will no doubt write again, the paradigm that China stocks = the VIEs of giant tech companies that make it to New York is keeping ave