Investors are warned they could miss out on “biggest growth story of our lifetimes, if they ignore investment opportunities in China", according to Kevin Pollack, managing director, Paragon Capital.

Kevin Pollack, managing director of Paragon Capital, is passionate about investment opportunities in China. “I’m a big China bull,” he declared. Pollack believes China is “a bit like the dotcom at the beginning” but believes the big difference is that “there is no bust on the horizon”.

Paragon, a New York City-based investment company with event driven onshore and offshore hedge funds, exploits opportunities in China using three main strategies.

“First we make open market purchases and sales of securities in Chinese companies that are trading in the US. Basically this is a long/short strategy,” he explained.

The second strategy is spotting Chinese companies where the injection of growth capital for expansion has not yet been fulfilled and stocks are trading below what Pollack believes will be true market price. “We get advantageous terms that let us effectively purchase stock in a company at prices below the market price with warrants for additional upside and lots of downside protections.”

The third area where Paragon invests is in alternative public offerings. “That’s where we take private Chinese companies public in the US and for doing so receive stock in that company worth significantly more than the cost of taking them public.”

Despite well-publicised problems with Chinese companies, Pollack is confident of his investments. He said it is important to build relationships as “that’s the type of culture.”

“You have to spend a lot of time on the ground with the CEOs and management, visiting the companies. We’re fortunate because we have a very strong network of professionals working in China who share opportunities with us.”

Despite the fact Paragon is offered up to 50 or more opportunities every month, the fund on average may invest in only one after careful due diligence.

“There are certain factors we look for in making investments in Chinese companies,” he explained. For example, Paragon looks for a strong management team, a fundamentally strong business model with good growth potential. Some of the companies Pollack has invested in have 20%-30% a year profit growth with others as high as 50%.

“It really just comes does to getting comfortable with the team you are working with, the service providers involved and making sure of your potential exit strategy as an investor,” he concluded.