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Blindly Shorting China Stock Yields Big Return

SHZ is no longer mistaken for a rare earth play, and I believe that it won't take long before it will no longer be mistaken for a credible fluorite play. This week, the stock was already showing weakness, dipping as low as $3.76 on Tuesday. Given that the only factor driving up the share price was a recent press release on fluorite quotas, I am confidant that this one will find its way back into the $1 to $2 range fairly quickly.

Disclosure: the author is short SHZ. The author can be reached for comments at comments@pearsoninvestment.com.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Rick Pearson is a Beijing-based private investor focusing on U.S.-listed China small-cap stocks. Until 2005, Pearson was a director at Deutsche Bank, spending nine years in equity capital markets in New York, Hong Kong and London. Previously, he spent time working in venture capital in Beijing. Mr. Pearson graduated magna cum laude with a degree in finance from the University of Southern California and studied Mandarin for six years. He has frequently lived, worked and traveled in China since 1992.

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