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High-Flyer (company)

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High-Flyer
Native name
幻方
Company typePrivate
IndustryHedge fund
Artificial intelligence
Founded2015; 9 years ago (2015)
FoundersXu Jin
Zheng Dawei
Liang Wenfeng
HeadquartersHangzhou, Zhejiang, China
AUMUS$7 billion (October 2024)
Number of employees
160 (2021)
SubsidiariesDeepSeek
Websitehigh-flyer.cn

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.

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.[1][2][3] They generated ideas of algorithmic trading as students during the 2007–2008 financial crisis.[1][2][3] 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.[1][3] The two subsidiaries have over 450 investment products.[3]

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.[2]

In 2019, High-Flyer set up a SFC regulated subsidiary in Hong Kong named High-Flyer Capital Management (Hong Kong) Limited.[4] It was approved as a Qualified Foreign Institutional Investor one year later.[5][6] In the same year, High-Flyer established High-Flyer AI which was dedicated to research on AI algorithms and its basic applications.[7]

In 2020, High-Flyer established Fire-Flyer I, a supercomputer that focuses on AI deep learning.[3][5] It cost approximately 200 million Yuan.[3][5] 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.[6] By this year all of High-Flyer’s strategies were using AI which drew comparisons to Renaissance Technologies.[8]

At the end of 2021, High-Flyer put out a public statement on WeChat apologizing for its losses in assets due to poor performance.[9][3] The performance of over 100 of its investment products declined by over 10%.[3] High-Flyer stated that its AI models did not time trades well although its stock selection was fine in terms of long-term value.[9][3] The models would take on higher risk during marker fluctuations which deepened the decline.[9][3] In addition the company stated it had expanded its assets too quickly leading to similar trading strategies that made operations more difficult.[9][3] Up until this point, High-Flyer produced returns that were 20%-50% more than stock-market benchmarks in the past few years.[3]

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.[10] This organization would be called DeepSeek.[11]

In October 2024, High-Flyer shut down its market neutral products, after a surge in local stocks caused a short squeeze.[12]

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.[13] It has been trying to recruit deep learning scientists by offering annual salaries of up to 2 million Yuan.[2]

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".[14]

In March 2023, it was reported that High-Flyer was being sued by Shanghai Ruitian Investment LLC for hiring one of its employees.[15] 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.[15] In May 2023, the court ruled in favour of High-Flyer.[16]

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".[17]

From 2018 to 2024, High-Flyer has consistently outperformed the CSI 300 Index.[8]

See also

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References

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  1. ^ 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.
  2. ^ 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.
  3. ^ 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.
  4. ^ "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.
  5. ^ 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.
  6. ^ 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.
  7. ^ Ottinger, Lily (9 December 2024). "Deepseek: From Hedge Fund to Frontier Model Maker". ChinaTalk. Retrieved 28 December 2024.
  8. ^ a b McMorrow, Ryan (9 June 2024). "The Chinese quant fund-turned-AI pioneer". Financial Times. Archived from the original on 17 July 2024. Retrieved 19 July 2024.
  9. ^ 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.
  10. ^ "[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.
  11. ^ Ottinger, Lily (9 December 2024). "Deepseek: From Hedge Fund to Frontier Model Maker". ChinaTalk. Retrieved 27 December 2024.
  12. ^ "Top China Quant Winds Down Strategy Pummeled by Market Rally". Bloomberg News. 21 October 2024. Retrieved 21 November 2024.
  13. ^ "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.
  14. ^ "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.
  15. ^ 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.
  16. ^ "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.
  17. ^ Zhen, Summer (27 October 2023). "Top China hedge fund suspends founder, cites reputational hit from family matter". Reuters.
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