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Brian Kelly founded Asian Century Quest, a New York-based Asian long/short stock fund, in 2005. While the fund is based in New York, it also has research offices in Japan and Hong Kong. The fund follows a bottom-up, fundamentally driven equity long/short research strategy with a primary emphasis in Japanese and Korean markets. Kelly moved to Japan along with his family in 1981 where he lived 10 years. During his stay in Japan, he worked at the Tokyo Stock Exchange for a period of time. Before founding Asian Century Quest, Kelly was the Japan/Asia sector head at Lee Ainslie’s Maverick Capital.

Below are the trading activities of Asian Century Quest as of 2Q2011:

Security

Ticker

Value (x$1000)

Activity

Return

Cognizant Technology Sols

CTSH

$91,675

14%

-17%

Baidu Inc

BIDU

$91,085

No Chg.

2%

New Oriental Educ & Tech

EDU

$44,688

-27%

13%

Imax Corp

IMAX

$32,430

300%

-49%

Home Inns & Hotels Mgmt

HMIN

$22,824

New

-6%

Melco Crown Entertainment

MPEL

$19,155

-63%

-5%

I C I C I Bank Ltd

IBN

$8,628

New

-23%

China Mobile Ltd

CHL

$8,252

New

10%

Sina Corp

SINA

$6,280

New

1%

Asiainfo Linkage Inc

ASIA

$4,238

New

-36%

Youku Com Inc

YOKU

$3,263

New

-38%

Philippine Long Distance Tel

PHI

$1,956

9%

6%

Qihoo 360 Technology

QIHU

$1,941

New

13%

E Commerce China Dangdang

DANG

$894

New

-40%

Harbin Electric Inc

HRBN

$803

New

31%

Zhongpin Inc

HOGS

$720

New

-16%

L & L Energy Inc

LLEN

$485

887%

-35%

Longtop Financial

LGFTY

$425

New

-99%

China Biotics Inc

OTCQB:CHBT

$381

300%

-71%

Renren Inc

RENN

$268

New

-22%

Sinocoking Coal & Coke Chem

SCOK

$236

No Chg.

-13%

China Yuchai International

CYD

$197

New

-26%

China North East Petro

NEP

$171

100%

-37%

China Marine Food Gr

OTCPK:CMFO

$123

New

-26%

China Green Agriculture Inc

CGA

$113

No Chg.

0%

Korea Electric Power Co

KEP

$133

-99%

-25%

During the second quarter of 2011, Kelly sold his entire stake (70K shares) at Las Vegas Sands Corp (LVS). LVS had comprised almost 9% of Kelly’s 13F portfolio at the end of the first quarter. Unluckily for Brian Kelly, the stock returned 10.45% since June 30th.

Kelly trimmed his Cognizant (CTSH) and Baidu (BIDU) holdings drastically in the first quarter of 2011 by selling 90% of his holdings in both securities. He kept his long position in both securities and did not further trim his holdings in the second quarter. In fact, he bought additional shares of CTSH (15 K new shares) during the second quarter and did not change his position in BIDU. CTSH lost 17% in value while BIDU gained 2% since the end of June. Stephen Mandel’s Lone Pine Capital shared Kelly's view and further increased its CTSH holdings by 35%. On June 30th, Lone Pine carried more than $630 million worth of CTSH holdings on its portfolio. As for BIDU, many funds kept their long positions and made some small trim offs in their portfolios. John Thalers’ JAT Capital increased its BIDU holdings by 15%.

Brian Kelly kept his bearish view on New Oriental (EDU) and further trimmed his EDU holdings in the second quarter. He sold 15K more shares and trimmed his holdings by 27%. At the end of last year, Kelly held 525K shares of EDU and has reduced his holdings down to 40K shares as of June 30, 2011. While he sold 485K shares in six months, the stock returned 13% since the beginning of the year. Robert Karr’s Joho Capital had nearly 25% of its 13F portfolio invested in EDU since the end of last year and we estimate that Brian Karr made more than $18 million from this securitiy despite the small trimmings he undertook since January 2011.

One of the largest losses Brian incurred since the end of the second quarter was in IMAX Corp (IMAX). Kelly bought 75K new shares of IMAX and increased his holdings by 300% during the second quarter. The stock lost almost half the value in just about 2 months. Brian Kelly might have lost more than $16 million from this security should he still carried these shares on September 2nd. Just like Kelly, Matthew Iorio’s White Elm increased its IMAX holdings by more than 300%. Brett Baraket’s Tremblant Capital might have partially saved itself from the great loss as it had reduced its holdings by 42%.

Brian Kelly added China Mobile (CHL) to his portfolio in the second quarter of 2011 and bought 17.5K new shares. He made 10% return from this security since the end of June. Ranjan Tandon’s Libra Advisors probably regrets that it trimmed CHL holdings by 84% during the second quarter of 2011. On the other hand, John Kleinheinz’s Kleinheinz Capital enjoyed the return more than anyone else as it had increased its CHL holdings by 38% in the second quarter.

Despite the very small share it constituted on Brian Kelly’s 13F portfolio, Longtop Financial Technologies (LGFTY) lost 99% in value since the fraud was revealed in the company. The company was halted on NYSE (ticker: LFT) on May 19 after Deloitte had resigned as its auditor stating that it found falsehoods in the company’s financial statements and there was deliberate interference by company officials in the audit process that included some unlawful acts. The stock closed at $36.18 on December 31, 2010 when the closing price was $0.27 on September 8, 2011. Chase Coleman’s Tiger Global Management might have incurred a significant loss from this security as it had held $49 million worth of LGFTY shares on June 30, 2011.

Overall, we estimate that Brian Kelly’s 13F portfolio lost around 8.9% in value since the end of the second quarter, vs. 12.2% loss for the SPY. Four of his top 9 stock picks had positive returns. We believe investors can beat the market over the long term by imitating Kelly’s top stock picks.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Top Asian Stocks Snapped Up By Asian Century Quest