A star fund manager, previously known for strong performance, is now at the center of controversy following sharp declines in the tech sector. Da Cheng Fund's manager, Guo Weiling, has drawn significant market attention after her funds made substantial purchases of KB LAMINATES (01888.HK) and KINGBOARD HLDG (00148.HK) in the second quarter, only to see the stocks plummet. The situation has intensified as shareholders of the "Kingboard" group of companies have been aggressively selling, accumulating over HK$20 billion in cash through disposals over a short period, leading many investors to question whether her funds acted as a "bag holder" at the peak of the market.
Public records show Guo Weiling, a female fund manager, holds a master's degree in finance from the University of International Business and Economics. She joined Da Cheng Fund in July 2015 and obtained her fund practitioner qualification in October 2017. After starting as a research analyst and assistant fund manager, she is now a portfolio manager in the equity investment department. With over 11 years in the securities industry, she became widely known for managing the Da Cheng Science and Technology Innovation Hybrid Fund. Data from Tian Tian Fund Net shows that since taking over the fund in January 2021, its A and C share classes have delivered returns exceeding 138%, making it one of Da Cheng Fund's flagship tech growth products. In January of this year, Guo took over three other funds—Da Cheng Science and Technology Theme Hybrid (LOF), Da Cheng Internet Thinking Hybrid, and Da Cheng Leading Power Hybrid—all of which have since posted returns around 40%. In April, she began managing the newly established Da Cheng Jingxian Growth Hybrid, which has seen A and C share returns of -2.52% and -2.63%, respectively. Previously, one of her managed products, the Da Cheng Industry Rotation Hybrid Class A, recorded a loss of 22.54% over her two-plus-year tenure.
As of the end of the second quarter, Guo managed five fund products. The largest was the Da Cheng Science and Technology Innovation Hybrid Fund, with net asset values of approximately RMB 4.872 billion for Class A and RMB 20.104 billion for Class C, totaling nearly RMB 25 billion. Notably, the Class C shares surged from RMB 2.982 billion at the end of March to RMB 20.104 billion by June, an increase of 574%, indicating massive inflows during the quarter. During this period of heavy capital influx, Guo made a controversial portfolio adjustment. The second-quarter report shows the fund heavily purchased KB LAMINATES and KINGBOARD HLDG, holding 24.257 million and 15.8725 million shares respectively by June 30, with a total market value of about RMB 3.714 billion, representing 8.36% and 6.51% of the fund's net assets, or nearly 15% combined. While both companies are listed separately, they are controlled by the "Copper Foil King" Zhang Guorong and his family, with highly correlated core businesses and stock prices, making them part of the "Kingboard" group. Although mutual fund rules cap holdings in a single listed company at 10% of net asset value, the concentration of nearly 15% in entities under the same controller has sparked debate.
Guo's Da Cheng Jingxian Growth Hybrid also held 923,500 shares of KB LAMINATES and 626,500 shares of KINGBOARD HLDG at the end of the second quarter, with a total market value of about RMB 144 million, accounting for 11.39% of the fund's net assets. Similarly, the Da Cheng Leading Power Hybrid held 358,500 shares of KB LAMINATES and 253,500 shares of KINGBOARD HLDG, valued at about RMB 56.83 million, or 10.90% of its net assets. In total, as of June 30, Guo's three funds held 25.539 million shares of KB LAMINATES and 16.7525 million shares of KINGBOARD HLDG, with a combined market value of RMB 3.915 billion.
Market conditions deteriorated sharply after Guo's heavy bet on the "Kingboard" stocks. Driven by cooling AI supply chain sentiment and valuation corrections in cyclical stocks, KB LAMINATES and KINGBOARD HLDG plummeted after hitting all-time highs. KB LAMINATES reached a record HK$107.20 on June 25, while KINGBOARD HLDG hit a high of HK$151.80 on June 22. By the close on July 31, their share prices had fallen to HK$29.42 and HK$39.20, respectively, representing declines of 70.33% and 66.75% in July alone. Based on the end-of-second-quarter holdings, had no positions been reduced, the Da Cheng Science and Technology Innovation Hybrid Fund alone would have faced a paper loss of HK$2.941 billion (approximately RMB 2.532 billion) in July on the "Kingboard" stocks. This dragged the fund's cumulative return down by over 38% in July, significantly underperforming major indices and causing heavy losses for new investors who bought in during the second quarter.
In an interview in April, Guo had warned about the dangers of inflated valuations without solid business models, noting that "high valuations without real profit support are essentially castles in the air, and a fall is only natural." However, despite this awareness, she chose to heavily increase her position in the rising "Kingboard" stocks, drawing criticism. In the second-quarter report for the Da Cheng Science and Technology Innovation Hybrid Fund released on July 21, Guo reflected on her actions. She stated that the fund had invested in some industry chain leaders in the second quarter, initially achieving decent relative returns, but "these price-increase stocks have recently experienced significant pullbacks, greatly impacting the net value." She wrote, "For these cyclical price-sensitive stocks, as prices rise rapidly along with stock prices, sensitivity to future prices also increases quickly, making them very fragile. From a risk-control perspective, we should have reduced exposure in a timely manner."
Da Cheng Fund was not the only one to heavily invest in the "Kingboard" stocks in the second quarter. Data shows that at the end of the first quarter, all public mutual funds held only about 16.27 million shares of KB LAMINATES, but by the end of the second quarter, this had surged to 178.6 million shares, an increase of over 162 million shares in one quarter. At the same time that mutual funds were buying, Kingboard shareholders were consistently selling. On June 17, KB LAMINATES announced that its controlling shareholder, KINGBOARD HLDG, through a wholly-owned subsidiary, placed 155 million shares at HK$76 per share, raising HK$11.78 billion. After the transaction, KINGBOARD HLDG's stake fell to 61.69%. Earlier in March, KINGBOARD HLDG had completed a placement of 130 million shares at HK$21 per share, raising HK$2.73 billion. Through these two placements, the company raised a total of HK$14.51 billion. Additionally, major shareholder Hallgain Management sold shares at the top. HKEX disclosures show that from June 22 to July 7, it reduced its stake by about 136.8 million shares, dropping its holding to 31.54% and realizing proceeds of approximately HK$16.726 billion. Directors of both KINGBOARD HLDG and KB LAMINATES also joined the selling, with eight directors of the former selling 27.288 million shares between June 22 and July 17, raising about HK$2.18 billion, and nine directors of the latter selling 17.381 million shares between June 22 and July 20, raising about HK$1.534 billion. Excluding the two earlier placements, share sales by directors and Hallgain Management since June 22 total about HK$20.44 billion (approximately RMB 17.599 billion).
As of June 30, Guo's three funds collectively held 25.539 million shares of KB LAMINATES, roughly one-sixth of the shares placed by KINGBOARD HLDG in June, making her the largest "bag holder" among mutual funds. From an industrial perspective, Guo's heavy bet on the "Kingboard" stocks was not without logic. KB LAMINATES is a global leader in copper-clad laminates, and its parent company KINGBOARD HLDG operates across copper-clad laminates, PCBs, chemicals, and property. In the first half of this year, driven by demand from AI servers and high-speed communications, prices of copper-clad laminates and upstream materials rose, making the "Kingboard" stocks a favored cyclical growth target. However, the hallmark of cyclical stocks is the volatility of their earnings and valuations. For Guo, this bet appears to be a concentrated wager on the cyclical phase. Her previously strong performance attracted significant new capital, but this high-concentration, high-position decision exposed those new funds to substantial net value swings in a short period. As of now, the fund manager has not responded to public discussions about "buying at the top." MACD golden cross signals have formed, and these stocks are showing strong momentum.
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