Authorities including the U.S. Securities and Exchange Commission and Department of Justice have been poring over what happened at Archegos and at the banks that provided its leverage, and so far, the government hasn't accused anyone of wrongdoing. SEC Chairman Gary Gensler told Congress in May that stiffer disclosure laws may be warranted for investment firms after the Archegos episode, and he’s since signaled plans to make more industry data publicly available.

Among a select group of U.S.-based investors, no research on potential stock bets in China is complete without first conferring with Beijing-born Li. His hedge fund is armed with about $4 billion in capital, according to investors, which would make it one of the biggest in the U.S. focusing solely on the world’s second-largest economy. People close to the firm described its performance and policies to Bloomberg on the condition they not be named discussing confidential information.

Admirers say his reputation is well-earned: Several times a year he spends four to six weeks on the mainland researching domestic companies — everything from technology and consumer products to health care, solar energy and agriculture. That digging has paid off. His fund has posted annualized returns of almost 30% for the past decade, the people close to the firm said. 

By January, Li had taken an intense interest in GSX, amassing a position that was unusually big even among Teng Yue’s concentrated bets. At one point that month, as the stock rocketed, GSX accounted for about 40% of the fund’s portfolio, according to people familiar with the holdings. 

As Hwang shifted Archegos’s portfolio in 2020 to include several Chinese companies, he discussed potential investments with Li, people familiar with the two men said.

Hwang ramped up his stake of Chinese ADRs in September of last year, though it’s unclear how large his bet on GSX got. The holding was significant enough that when banks unraveled Archegos’s portfolio — erasing some $20 billion of Hwang’s fortune in just two days — shares of GSX fell by more than half.

Li later suffered further blows to his portfolio of Chinese stocks when President Xi Jinping launched an unexpected crackdown on some of the industries the money manager had targeted, such as online education, ride-hailing and trucking on demand.

Chinese mainland indexes are up less than 3% this year, and the shares that trade stateside have tumbled 34%. Investors say that even Mr. China couldn’t have foreseen how swiftly and aggressively the government might rein in some types of business.

Tiger Pedigree
Li’s struggles in 2021 contrast with his unlikely rise to running a multibillion-dollar fund. He arrived in the U.S. from China more than two decades ago to study at Claremont McKenna College. At the time, he was trying to master English and suffered from homesickness, according to a tribute he wrote for a professor at Claremont who died last year. Li is now a trustee at the school.

After a two-year stint at JPMorgan Chase & Co. as a technology, media and telecommunications investment banking analyst, he joined Hwang’s Tiger Asia in 2004 to cover Chinese companies. That move introduced Li into the tight-knit Tiger world — the group of portfolio managers trained by hedge fund legend Julian Robertson. Li even joined the Tiger Foundation board, the philanthropic organization of Robertson and his so-called Tiger cubs.