Saturday, July 4, 2009

Zhao Danyang, Stock Manipulator?

According to NYT, bloggers in China are "feasting" on the exploits of Mr. Zhao Danyang. He is being viewed as just this side of a pump and dump stock market operator.

Mr. Zhao is the Chinese money manager who bid $2.1 million to have lunch with Warren Buffett. He had that lunch in late June. He brought along to the lunch annual reports of a Chinese supermarket firm, WuMart, to give to Buffett, as a stock idea. Since word on this was reported in the press, the stock is 25 percent higher and the value of Mr. Zhao’s stock holdings in WuMart have climbed.

Writes NYT:

Bloggers in China are now feasting on Mr. Zhao, who runs several investment funds in Hong Kong, pointing out how he cleverly turned what looked like an expensive $2.1 million lunch date into a short-term gain of $14 million.

“Zhao Danyang is very smart at manipulating the media,” a blogger named Lao Pi said earlier this week. “He made his own stock go up dramatically
This is absurd.

The day after Mr. Zhao's meeting with Buffett, I met with Mr. Zhao in New York. He clearly reveres Buffett. During the lunch Buffett apparently spent considerable time discussing his philosophy on charity and why he is leaving most of his money to the Bill & Melinda Gates Foundation. If I had not turned the conversation to the stock market and investments, Mr. Zhao would have been content during our conversation to simply discuss Buffett's charity philosophy.

In fact, it wasn't until the end of our meeting that I asked Mr. Zhao about specific Chinese stocks. Mr. Zhao had no idea at what point I was going to end the interview, thus if his intention was to promote Wamut, he would have brought it up long before I asked him about specific stocks.

The impression I got of Mr. Zhao was that he is a very humble man who clearly has Buffett's buy and hold philosophy at the core of his own investment beliefs. He's the real thing and as far from a pump and dump operator as you can get. (A pump and dump operator once gave me a ride from Seattle, Washington to Vancouver British Colombia. He talked non-stop for hours about some ludicrous stock.If the U.S. really wants to torture Gitmo prisoners, they should put a pump and dump stock promoter in the prisoners jail cells for a couple of hours. )The Chinese blogging community is way off base on this one. Mr. Zhao is a very sincere money manager with a long term vision.

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