8 years, 1 billion: the person who caught the bullet chooses to win slowly

Author | South China Soros

Source | Watch Financial Commentary

On March 3rd, as the Shanghai Composite Index closed lower, a small- and mid-cap company called Xinhecheng rose over 4%, with its market value surpassing 100 billion yuan for the first time.

This company itself is not considered a star enterprise, but among its top ten shareholders, a low-profile capital giant that has been布局ing for eight years has caught the market’s attention.

In 2017, this institution entered the market, and to this day, the stock it holds has increased by 240%. If it has never reduced its holdings, the unrealized gains amount to over ten billion yuan.

It looks like another victory of patient capital, but what if the protagonist this time is a private equity fund?

What if the leader of this private fund is someone who has been评价ed by peers as “able to pull back the bullets fired in the market”?

Firing bullets means being ruthless in seizing fleeting opportunities; being able to catch them with bare hands means precise hedging of the effects of previous decisions. In a split second, it’s a contest of skill, where every millimeter counts.

But if this person has not gained fame for speed since entering the private equity world, but rather for patience and calmness, rarely showing up in the limelight, it adds a layer of mystery and elevates their境界.

In the Chinese private equity圈, Qiu Guogen and his Chongyang Investment are probably second to none in terms of低调, and no one dares claim first.

Chongyang Investment’s main research team is led by Qiu Guogen.

In China’s 30 years of A-shares, we see victories of long-termism as well as times dominated by speculation. The players at the table come and go, changing identities or strategies.

Every decade, every sector rotation, there are always voices claiming “value investing is dead.” Perhaps Chongyang Investment, with assets under 20 billion yuan, isn’t dazzling among the many高手 in private equity, but it remains one of the most稳健 and纯粹 believers in value investing.

Those who fire bullets choose to win slowly

Qiu Guogen doesn’t always emphasize speed. In fact, within Chongyang, he is often referred to as “Mr. Qiu.”

This nickname may stem from his scholarly气质: he loves reading, especially history, and is keen on extracting investment哲学 frameworks from historical insights.

It may also come from his calm demeanor: he writes important strategic reports for clients himself, tirelessly refining them without ever feeling satisfied. When the 2013 Securities Law was introduced, marking China’s first policy红利 period for private funds, everyone expected Chongyang to lead the way in launching public offerings. Qiu Guogen’s response was “no rush.”

The name Chongyang emphasizes sustainable compound growth, just like someone who can catch bullets, choosing to win slowly in the capital市场.

Time deserves respect. If Buffett and Soros had left the market 30 years ago, they might have been早早 forgotten by history. In Qiu Guogen’s view: “For an investor to claim success, at least one of two conditions must be met: one, you are already dead, and before death, you were successful; or two, you have退出ed the industry, and before退出, you were successful.”

Time is also the best friend of investors. Although long-termism may seem老派, at least in Chongyang’s case, the power of time is evident.

In the private equity industry, which often creates wealth myths, Chongyang Investment appears “平淡无奇.” It lacks激动人心的传奇 stories, and its steadily rising net value curve leaves little room for期待. Compared to那些黑马 that frequently emerge, its performance ranking each year is only中等偏上, not very吸引人.

The market has summarized: occasional精彩表现, mostly平凡, but fortunately, large亏损 times are rare.

But what would be the result of such平淡风格 over a 20-year horizon? Take Chongyang’s first hedge fund as an example. This style has forged a nearly连续上涨的业绩 curve, with a return of over 750% since inception and relatively small drawdowns among billion-yuan private funds.

Such performance is actually more稀缺, like the industry’s共识: “Five times in a year is common, but doubling in five years is rare.”

How to create such a curve? A科学的选股机制 is fundamental. Chongyang’s投研体系 can be summarized as “三四七八.”

“Three” refers to investment decisions based on严谨清晰的逻辑 and全面深入的实证, with dynamic tracking of target fundamentals; “Four” is macro analysis focus; “Seven” involves specific要素 for investment targets; “Eight” refers to Chongyang’s macro策略研究的八跟踪. This体系 forms the basis of “全面投研.”

Additionally, you need a sufficiently低的,合理的买入价格. Low prices not only offer more growth potential but also serve as a strong hedge against风险.

In short, a good investment often has three条件: good公司, good行业, good价格.

Most agree with this, but few realize that even if all three are met, a truly十拿九稳的投资 still有相当的距离.

Suppose you have 80% confidence (already quite高) that your target meets these three条件, then the probability of success is only slightly above 51% (80%*80%*80%).

Even if you add other higher confidence expectations, like a 90% belief in significant fundamentals improvement, it doesn’t help much mathematically. Increasing one variable also increases uncertainty, leading to diminishing marginal returns in信心预期.

Therefore, the highest principle beyond all investment actions is to少犯错. And those who make time their friend can often reduce mistakes.

Back in 2015, Chongyang neither participated in定增 nor engaged in any中小创 or新三板业务, even though these were market hotspots.

The result was that short-term long products’ returns甚至远远落后于指数, and hedge products performed poorly, leading outsiders to criticize “performance worse than grandma.”

But the subsequent泡沫 of炒壳 proved Chongyang’s correctness. During that brutal股灾, Chongyang’s long products’最大回撤 in 2015 was less than 9%, while the CSI 300’s was up to 45%.

Ultimately, Chongyang drew the conclusion before the潮流 arrived: from 2012 to 2015, the market was driven not by macro or micro fundamentals, but by无技术含量的、不可持续的套利.

Many similar examples exist. In 2012, Chongyang invested in China Yangtze Power, holding it for nearly 8 years before退出ing from the major shareholder list in 2019. During their holding period, the stock price increased 2.33 times.

Looking back, Chongyang’s退出 timing may have been slightly早, missing out on the subsequent大幅上涨. But in a way, this reflects Chongyang’s investment philosophy: earn in the first half, avoid earning in the second half, especially avoid最后一部分的钱.

Even if the returns of the first and second halves are the same, the risks are certainly不同. Persisting long-term in this way, the volatility can be reduced while maintaining the same收益率.

This approach might miss some opportunities, but it emphasizes稳健.

Using全面投研 to reach your own conclusions,坚持你的判断, and减少错误, then letting time do the rest—that’s Chongyang’s investment advice. As Qiu Guogen says: “Time is the private equity industry’s best friend.”

And the most crucial way to reduce mistakes is to understand yourself.

反人性，接近人性

Humans are inherently unsuitable for investing.

The羊群效应 is the most powerful force in capital markets. Contrarian investor David Dreier describes:

“When everyone rushes in the same direction, maintaining independent thinking and going opposite requires enormous courage and discipline because it goes against our innate desire for social认同.”

If you don’t follow the herd, you’re prone to陷入自我怀疑, which is a main cause of investment failure. Mark Sullins, in ‘Why You Can’t Be Buffett,’ states that the most important and rare trait for a successful investor is the ability to保持思路一致 during大起大落.

In fact, many things haven’t fundamentally changed; what has changed is investor情绪.

反人性 is difficult, but successful investing often relies on it.

Is there a way to make it easier?

One strategy is to build a护城河 with组合. For example, Chongyang senior strategist Tan Wei’s approach divides the market assets into growth stocks, growth value stocks, and deep value stocks, using价格 as the核心参考,逆势买入.

This strategy requires sufficient研究深度 to identify suitable潜在投资标的. Once the number of targets is sufficient, constructing a组合 becomes relatively simple—just compare them阶段性横向，选择性价比高的纳入。

The final result is an投资组合 that balances成长股 and均衡股, striving for “东不亮西亮.”

Another approach is to跳出传统分析框架.

In the 1990s, classical金融理论 based on有效市场假说 faced major challenges, revealing its局限性. Meanwhile,行为金融学, originating in the late 70s and 80s, accelerated its integration into mainstream finance, providing important补充 and修正 to传统理论.

People then发现，资本市场唯一的确定性其实只有人类自己——全球股市经历了300多年的起伏，基本面一直在变化，唯有人性永恒。正如Howard Marks所说：“周期永远存在，因为人性永不变。”

Anchoring on constants and leveraging them is a wiser core strategy. Various派系 emerge, with George Soros’s“反身性” philosophy being a prominent example. Its核心在于提前预判人性谬误并规避——“流行偏见影响基本面，而基本面变化又会改变偏见。成功投资在于提前发现这种谬误。”

Not to mention Richard Thaler, father of行为金融学: “真实的人是‘社会人’和‘心理人’，我们会犯系统性错误，这些错误是可以预测的。”

From this perspective, the highest境界 for ordinary investors is to接近人性, and利用人性.

What are human traits? They are耐不住寂寞. Recall that even when you decide to do value investing, you often feel impatient and find it hard to resist the urge to操作. The results, however, are often不理想.

But the act of操作 itself isn’t the problem; it’s the方式方法 that need upgrading.

Instead of反人性, it’s better to顺应人性. Chongyang’s value investing provides a具体方法论.

Qiu Guogen’s approach is: “Chongyang doesn’t simply dream of earning eight times on a single stock, but by ‘relay’ investing in three stocks to earn one time each, you can also achieve an eightfold return. The latter is easier, more realistic, and more liquid.” He calls this ‘价值接力’ (value relay).

This ease isn’t just at the市场层面—finding four excellent 100-meter sprinters is easier than finding one outstanding 400-meter runner, especially in A-shares, where volatility is high and companies often face阶段性利空压低股价.

It’s also more about human nature—waiting ten years versus acting opportunistically, which is easier?

When combined with the earlier portfolio construction theory, even if an investor suffers浮亏 or misses opportunities due to various reasons, the overall波动性 of the组合 can be effectively平抑.

In other words, it provides some容错空间 for普通投资者.

In fact, Chongyang’s embrace of human nature isn’t limited to investing.

It’s hard to believe that in an industry emphasizing快速反应, Chongyang’s下班时间 is 5 pm, and the office is often empty by 6 pm.

Chairman Wang Qing explained: “Everyone continues working at home because research never stops. These are lifelong skills.”

The private equity industry often shows two extremes: one working late into the night, the other leisurely如闲云野鹤. It’s not about right or wrong, but the choice of leaving work early reflects the私募的气质.

Another aspect is the fund management模式. Chongyang was among the first in China to推行多基金经理共管模式.

This means dividing a single基金 into separate仓位, managed by multiple基金经理, each operating relatively independently within their scope. The final performance is the sum of each manager’s contribution. Top international private funds like Bridgewater, Millennium, and Castle have adopted this for years.

The benefits are clear: it reduces reliance on individual能力, broadens the overall能力边界, and decreases errors from单一决策.

Although this模式 has become mainstream among top private funds, it’s not yet widespread in China’s private industry.

A major reason is internal协调阻碍—difficult to achieve synergy among multiple managers, even with forced coordination.

But Chongyang has no such concerns. Most投委会 members are graduates of Renmin University, sharing similar backgrounds that ensure smooth沟通.

Moreover, Chongyang rarely hires externally, preferring to培养应届生. As veterans, Qiu Guogen and Chen Xin control the overall风格 and provide platforms for新人, giving them room to grow.

You have to admit, people tend to合作 with those they get along with—that’s human nature. While this may lead to a relatively closed environment and slow growth, it ensures the investment理念 remains consistent.

Epilogue

In 1992, shortly after the establishment of the Shanghai and Shenzhen markets, Wu Xiaoqiu, then not yet a professor, was preparing to write a book.

His motivation was simple: leverage expertise and increase income. Thus, China’s first证券辞典, The Complete Book of Stocks and Bonds, was born, with 5 million words, planned by Wu Xiaoqiu.

At that time, the contributors were all prominent figures. For example, chief editor Jin Jiandong was then the head of the Financial Management Department of the People’s Bank of China, and seven years later became the first chairman of Guotai Junan Securities.

Except for a 23-year-old seemingly unremarkable young man.

At that time, Qiu Guogen was a graduate student in investment economics at Renmin University. Perhaps his most notable contribution was initiating the university’s证券协会 and engaging in模拟炒股, reportedly China’s first高校模拟炒股案例.

Ten years later, in 2001, Wu Xiaoqiu emphasized in a speech: “China’s金融 must be strong, and the capital市场 should become an international金融中心.”

In the same year, Chongyang Investment was established in Shanghai, initially managing only Qiu Guogen’s personal assets, akin to a低配版“家族办公室.”

The next decade, the new CSRC chairman posed a startling question: “Can we do without审查IPO?” This planted a seed in Wu Xiaoqiu’s mind: “Make China’s capital market the world’s most important asset allocation center.”

That year, Chongyang’s规模 just surpassed 10 billion yuan. As a value投资信徒, it entered China’s private equity顶尖殿堂 for the first time.

Another decade later, the registration system was finally implemented in A-shares. Qiu Guogen stepped down as法人, remaining as首席投资官, handing over to Wang Qing.

If these two are regarded as师徒, then over the past thirty years, one has推动资本市场的完善, the other推动私募行业的阳光化, both旗帜 in value investing, adding new options to the game of capital markets.

This choice is vital: no longer judging private funds by排名; no longer valuing them by规模; allowing space for短期观点、注意力、空间, and focusing on long-term.

As more Chinese companies go from obscurity to global stage, this may be the true命题 facing the private equity industry.

References:

Top Chinese Private Equity Interviews by Haomai Fund Research Center

Data support: Wind