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Xu Xiang, who led Zexi Investment’s ascent to the top of China’s money managers, is known in the country as "hedge fund brother No. 1" and inspired both awe and skepticism among peers for his knack of timing swings in volatile stocks.

Xu, the latest target of the government’s crackdown following a $5 trillion summer stock market rout, is facing a probe for alleged insider trading and stock manipulation, according to state media. Xinhua News Agency on Sunday reported that Xu had been detained by the police. On Sunday, Shanghai police took away computers and other material from Zexi’s office, according to a building management official who asked not to be identified.

China is intensifying probes into strategies authorities suspect may have exacerbated the selloff that started in June. Two executives at Yishidun International Trading and the technical director at Huaxin Futures were arrested after a police investigation showed they made 2 billion yuan ($316 million) in “illegal profit," Xinhua reported on Sunday, citing the Ministry of Public Security.

Widening Crackdown

China's Top Money Manager Questioned in Insider Probe

The managers add to a growing list of executives swept up in a crackdown, including those from the nation’s biggest brokerage, a regulatory official who previously ran the Shanghai and Shenzhen stock exchanges, and a journalist from business magazine Caijing. Agricultural Bank of China Ltd. President Zhang Yun was taken away to assist authorities with an investigation, people familiar with the matter said on Monday, without giving details.

Zexi occupies half of the ninth floor in the BEA Finance Tower in Shanghai’s Lujiazui financial district. The office was closed around 8 a.m. Monday, with a stack of that day’s newspapers left by the front door. Calls made to the office went unanswered, and Xu did not answer calls made to his mobile phone. Reports in Chinese media have not said whether Xu or Zexi have made any official statements.

‘Astonishing’ Return

Zexi managed four of China’s top-10 performing hedge funds between June and August, according to Shenzhen Rongzhi Investment Consultant Co. The average return of Zexi’s five stock funds has ranked in China’s top three every year since the firm was founded five years ago, according to the Economic Daily’s website. Those results earned Xu his “hedge fund brother No. 1” nickname, which conveys admiration. The performance also led to comparisons with Steven A. Cohen, the legendary U.S. hedge fund manager who ran SAC Capital Advisors, said Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong. SAC Capital shut down last year after pleading guilty to securities fraud and paying a record $1.8 billion penalty to U.S. authorities.

Amid tumult in China’s stock market, five funds managed by Xu yielded an “astonishing” 249 percent on average this year through September, according to Shenzhen Rongzhi. That’s even as the Shanghai Composite index has advanced only 2.8 percent in 2015, after a 36 percent plunge since June 12 has wiped out most of this year’s gains.

“The market has been speculating for a while regarding his operation,” Hong said.

Grandmother’s Birthday

Xu was taken away by police on the highway between Shanghai and Ningbo on Sunday morning as he was heading to Ningbo to attend his grandmother’s birthday, China National Radio reported. At 10:33 a.m on Sunday, Ningbo police issued a statement on its official Weibo account saying that all entrances to the highway were closed due to temporary traffic control, and 40 minutes later, the police said the blockage was lifted.

Zexi manages about 28 billion yuan in assets, the biggest among China’s hedge-fund companies, according to Touzi.com, which provides research on financial and wealth management products. Zexi doesn’t short in the market and doesn’t even own a stock index-futures account, the firm told the Economic Daily’s website in an article posted Sept. 24.

China Seven Star Holdings Ltd., a media management company, slumped as much as 44 percent in Hong Kong trading Tuesday, the most in more than two months, after saying in a filing it can’t reach Xu, who was among subscribers in a share offering. Xu planned to buy 1 billion shares, or a 3.47 percent stake, according to a filing last month. Representatives at China Seven Star couldn’t immediately be reached for comment.

Some Skepticism

“We adored and were surprised at Zexi’s performances as they achieved what ordinary people couldn’t achieve,” Li Jingyuan, head of securities investment at Shanghai Zhaoyi Asset Management, said in an interview. “But at the same time, there was lots of skepticism about Zexi over the way they made money from the market, its relationship with listed companies and sources of information.”

Xu, born in 1976, started investing at high school in the eastern city of Ningbo, according to the official People’s Daily. Skipping university, he instead became a professional investor, accumulating over 4 billion yuan in personal wealth and managing tens of billions of yuan, the People’s Daily reported on Monday.

While in the past Xu walked to his Shanghai office every morning from his home across the street, wearing a pair of kung fu shoes and with his head lowered, in the past year he was rarely seen, the building official said.

Admired Mao

According to Wujie, a media company part-owned by Alibaba Group Holding Ltd., Xu named Zexi after two people that he admired most -- Mao Zedong, the founding father of the People’s Republic of China, and Emperor Kang Xi, who ruled China during the height of the Qing Dynasty and is known as the longest-ruling emperor in the nation’s history.

While private investment firms are broadly categorized as hedge funds in China, they differ from their global counterparts in not making extensive use of hedging strategies amid restrictions.

China’s government is targeting sophisticated traders amid accusations that their strategies worsened the stock selloff. The nation was home to the world’s most active futures market until policy makers raised margin requirements, tightened position limits and announced investigations into “malicious” short sellers.

Yishidun and Huaxin had “foreign technological support" in developing high-frequency trading software, Xinhua said, without naming any firms. Calls to Huaxin went unanswered, and Yishidun’s phone number isn’t registered, according to public records searches.

(Updates with highway arrest in first paragraph under subhead `Grandmother's Birthday'.)