The Hedge Fund That Wasn’t

Bruce Shi of Thrones Capital claims in Forbes to be one of the most successful investment managers in the world. An investigation suggests he’s something else.

There is nothing better than a hedge fund mystery, and this one has it all: Fast cars, prestigious academic achievements, a glamorous man of mystery, and, to sweeten the pot, a heavy dose of artificial intelligence.

The kernel of this mystery was revealed to me in a July 25, 2019, Forbes article. It begins with a series of non sequiturs on AI and investing (“Algorithms analyze the history of risk cases and identify early signs of potential future issues”) and then devolves into a mawkish paean to “Dr. Bruce Shi” and Thrones Capital, the “top hedge fund company” he founded — which “combines real-time market data provided by the company with an advanced learning engine to identify patterns in price movements for high-accuracy market predictions.”

Who is Dr. Bruce Shi, and what is his Thrones Capital? A quick web search revealed a July 28, 2019, article on Entrepreneur fawningly entitled “Bruce — The Inspiring Journey of a Young Entrepreneur,” in which the unidentified author tells us:

The founder of Thrones Capital — Bruce Shi — drives a Lamborghini, walks to his office with Palo Alto Network co-founders, and lives in the Dragon Vein of the Silicon Valley, where all the rich and powerful people live. A neighbour of Zhiyuan Yang, founder of Oracle, and many other top business moguls, Bruce Shi is a mysterious character who founded Thrones Capital at the age of 30. At present, the company is one of the most promising AI hedge funds in the world. 

The genesis of these articles seems to be a March 17, 2019, press release entitled “Thrones Capital Led by Bruce Shi Launched the AI Trading Hedge Fund.” The release contains a trove of information on Shi and the sometimes named “AI Trading Hedge Fund” (the press release later calls it the “Artificial Intelligence Quantitative Trading Fund”). 

For example, Bruce launched the fund in 2017. It has about

$20 million in assets under management and “has maintained solid performance for the past three years, with steady growth, high returns and adequate risk control measures.” Most interestingly, the error-ridden press release includes this summary of the company’s investment process:

Thrones Capital targets capital growth and trading the US stock market index. The fund takes risk control as its top priority and draws the maximum benefit within the controllable risk range. The fund combines short-term trading, medium-term trend, and fixed-income strategy. It combines trend and value investment, and optimizes the combination into high-return, low-return, stable-revenue, and low-risk investment products. Thrones Capital strategy leverages artificial intelligence and big data analytics with supervise learning and reinforcement learning algorithms. The artificial intelligence engine learns historical market data and real-time market data, dynamically optimizing trading model. The fund’s goal is to obtain higher annualized return under the premise of controlling risk.

What does this fund not do? The kicker is the claim that Thrones is using reinforcement learning algorithms. There are only a handful of companies in the world that have created commercially viable reinforcement learning applications — and there are fewer still in the asset management industry. 

Which raises the obvious question: Is Shi building the next Two Sigma, or is he a maladroit rogue trying to separate unwitting investors from their hard-earned money by dazzling them with claims of brilliance and AI jargon?

At first glance, the evidence supports the latter conclusion.

A quick search of U.S. regulators’ websites failed to turn up either “Shi” or “Thrones Capital” (or, as we will see later, “Thrones Investment LLC”). Thinking Shi/Thrones might be registered with a state agency, I called the California Department of Business Oversight and spoke with a wonderful employee who found no record of either Shi or Thrones. But I was willing to give Shi the benefit of the doubt: Maybe his assets under management or limited number of clients exempt him from registration.

Next, I visited the Thrones website and discovered that the site cannot be reached. 

This, of course, only goaded me on. Down the rabbit hole I went, pursuing two lines of inquiry. 

First, I contacted anyone that might be affiliated with Shi or Thrones. 

I started with the obvious and supposedly most helpful source: the media contact listed in the original press release. In fact, I sent her three emails. 

No reply. 

I then asked “fellow journalist” Ilker Koksal, the author of the Forbes article, for any information he had. Mr. Koksal never replied to my LinkedIn message or an email I sent to his private company. 

I am not surprised by his reticence. The saccharine tone of his article, the shallowness of his research, and the fact that Mr. Koksal is not a Forbes staff reporter but a “contributor” led me to conclude that à la Jeffrey Epstein, he was likely paid by Shi or a proxy to write the story, or simply paid to publish the story under his byline. This is a real possibility because, as one critic has written, “just about anyone could get to be a Forbes contributors [sic]. Forbes never edits those contributor posts.” (Full disclosure: Although I am an independent columnist for Institutional Investor, not a staff reporter, every column I write is vetted, edited, and approved by II’s staff before publication.)

I sent a note to the editor-in-chief of Entrepreneur asking for the contact information of the unidentified author of the “Bruce” article. No reply. I’m guessing the piece is another instance of pay-for-play media, and it was probably written by the same person who wrote the March press release.

I contacted several individuals who, in their LinkedIn profiles, appeared to be current or former Thrones Capital interns or employees. No reply. 

And, of course, I tried to find Shi.

First stop: LinkedIn, where there was a profile for “Bruce S,” who self-identifies as “the founder of Thrones Capital.” Bingo. The profile indicates that Shi attended Carnegie Mellon University from 2013 until 2017 and earned a Ph.D. in electrical and computer engineering. Seeking verification, I wrote to CMU and was told via email, “We can confirm that a student with that name attended CMU from the summer of 2015 through the spring of 2017” and that “Carnegie Mellon University has not awarded Mr. Shi a degree.” (The profile also says that Shi earned a masters in science from the University of Michigan, which Michigan did confirm.) 

It was clear that Shi was falsely claiming to have a Ph.D. Were his claims of scholastic brilliance also false? For example, the Entrepreneur article says that “from emerging as the winner in the Hua Luo Geng mathematics’ competition [sic] to laying his hands on the first prize at the mathematics and information technology Olympiad, Bruce added many feathers to his hat.” 

Though the Hua Luo Geng International Golden Cup Mathematics Competition is considered one of the toughest math contests in mainland China, I could not verify Shi’s victory. But does it even matter? After all, this is a competition for primary school and junior high school students; claiming victory would be like Izzy Englander putting his PSAT score in his CV.  

I did find the International Olympiad in Informatics and the International Mathematical Olympiad — neither of which lists Shi as a winner — but no mathematics and information technology Olympiad. 

The press release also states that Shi won “the Best Paper Award at IEEE for one of his papers published in 2016 during his Ph.D. program.” The Institute of Electrical and Electronics Engineers is indeed a prestigious organization in the AI world, and though I found three papers on its website listing Bruce as a co-author (along with six or more other co-authors), I uncovered no evidence that his 2016 paper had won an award. In fact, there were two papers with 2016 publication dates; one was cited just once, the other five times. Logic would suggest that the winner of “the Best Paper Award at IEEE” would certainly have been cited more frequently. 

Yet the IEEE discovery revealed a helpful clue as to who, exactly, Bruce Shi is. The published papers show Shi’s given name to be Runyu, which allowed me to confirm the legal existence of Thrones Investment. 

In July 2017, Runyu Shi submitted Thrones Investment’s original articles of organization to the California secretary of State. Shi is listed as the LLC’s “one manager” and is the signatory; Thrones Investment’s business address is 2543 Borax Drive, Santa Clara, California.  

Let me pause to clarify something here: Thrones Investment LLC is Shi’s legal corporate entity; it does exist and is still registered with the state of California (although there seems to be some funkiness associated with its most recent filings). According to those documents, its “type of business” is “Investment and IT Services.” Thrones Capital claims to be an “AI Quantitative Hedge Fund,” although I could find no independent documents or evidence of this entity’s business or regulatory registration or commercial activities.

Instead, a web search for Thrones Investment LLC led to the Apple app store and the free “BAHappyHour” app, which “allows San Francisco Bay Area users to find restaurants nearby and get happy hour information.” Thrones Investment is listed as the seller and copyright holder.

As of August 4, 2019, the app had exactly one five-star review.

Thrones Investment was also identified as the developer of another free app, “Thrones Capital AI Hedge Fund,” with this clumsy description: “The Fund is based on automatic trading system and supervised under experienced trader. The auto trading system leverages market historical data and advantaged machine learning, reinforcement-learning algorithm.”

As of August 4 it, too, had received a single five-star review. 

However, the app disclosed another inconsistency: In a now-removed screenshot on the app landing page, the street address listed — 555 Airport Boulevard, Suite 450, Builingame [sic], California — differed from the street address in the California secretary of State filings. Perhaps unsurprisingly, neither address would allow Shi to walk “to his office with Palo Alto Networks co-founders” or be a neighbor of “Zhiyuan Yang, founder of Oracle.” (Alert readers will recognize that Zhiyuan Yang is, of course, Jerry Yang, co-founder of Yahoo, not Oracle.) 

And the April 2019 Google street maps of the Santa Clara address did not show a Lamborghini in the driveway. 

The app experience pushed me to investigate the last bastion of many a rogue: social media. Certainly, the distribution of a formal press release and the placement of two media stories must mean that Shi and Thrones have a significant digital footprint. 

Nope. Aside from the seldom reviewed apps, the tepid LinkedIn profile (which has a surprisingly small number of contacts for a player with Shi’s purported international successes — 206 as of August 7, 2019), two nonworking websites, and few retweets of the press releases, nothing. 

There were two photos, allegedly of Shi, in the Entrepreneur article that I uploaded to Google images to see if they generated any matches. I thought maybe there would be a picture of Shi holding up his award from the Olympiad or the IEEE. Nothing. 

Bruce Shi is clearly not what he claims to be. But more interestingly, why is he claiming such things at all?

Given all these inconsistencies and red flags (and there are others, including Thrones Investment’s most recent filing with the California Secretary of State), I dismissed the theory that the media and press releases were placed to support a hedge fund scam to raise assets. If they were, that is surely the most transparent and bungling scam ever. 

For the same reason, I rejected the more benign explanation that all this was done to raise assets for a possibly legitimate but poorly managed hedge fund. This sentence from the press release alone should cause any prospective investors to turn on their heels: “[Shi] believes that the goal of Thrones Capital is to create sustainable and steady growth opportunities and to maintain profitability by launching a fresh profit strategy ceaselessly.”

My next theory was that Shi established these companies and apps and built a media presence to demonstrate his attractiveness to a prospective paramour or that paramour’s family. 

This would explain the hyperbolic flattery and references to childhood math achievements and the Olympiads. Yet this would be a lot of work to woo a partner. 

I’ve since become convinced that the most likely explanation is that Shi created this elaborate construct of media, brand building, and companies to support his application for a very specific purpose: an immigration visa — specifically, a First Preference EB-1 immigration visa. 

According to Wikipedia, “the EB-1 is a preference category for United States employment-based permanent residency. It is intended for ‘priority workers.’ Those are foreign nationals who either have ‘extraordinary abilities,’ or are ‘outstanding professors or researchers’ . . . [including] applicants who can demonstrate their extraordinary ability in the sciences, arts, education, business, or athletics through sustained national or international acclaim.”

Specifically, I am guessing that Shi is shooting for an EB-1A visa, which “requires the petitioner to show that the individual has either won some major award (Nobel Prize, for example) or met at least three out of ten regulatory criteria and show that the individual has ‘risen to the very top of the endeavor with national or international acclaim.’” Three of those criteria that Shi’s activities clearly are meant to satisfy, as listed on the U.S. Citizenship and Immigration website, are:

“Evidence of receipt of lesser nationally or internationally recognized prizes or awards for excellence.” The IEEE prize in 2016; the Hua Luo Geng and Olympiad victories: Check.

“Evidence of published material about you in professional or major trade publications or other major media.” The Forbes and Entrepreneur articles; newswire stories in Yahoo Finance and other outlets: Check. 

“Evidence of your authorship of scholarly articles in professional or major trade publications or other major media.” The three IEEE papers: Check.

And like any other individual with extraordinary ability, Shi made sure to meet a fourth criterion:

“Evidence that you command a high salary or other significantly high remuneration in relation to others in the field.” The brand-building claims that Shi is the founder of “one of the most successful hedge funds in the world” and that he drives a Lamborghini and lives in a ritzy neighborhood: Check.

I put this visa theory to an immigration attorney who assists Chinese clients, many in the IT space, with their EB-1A applications. Although she does not know Bruce Shi, she said he is following the classic EB-1A playbook: Get as much national or international media as possible, demonstrate you’ve won some academic prizes and published some papers in academic journals, hint at your material success, and make clear that you perform “a critical role in a distinguished organization.” 

Yet she believed that the inconsistencies and deceit I uncovered would likely not be detected by government adjudicators. For example, they would likely ask Shi for a copy of his Ph.D. diploma but not contact CMU; they would not know that Thrones is not “one of the most promising AI hedge funds in the world”; and they would not seek to validate Shi’s various claims of scholastic exceptionalism. And as the attorney importantly pointed out, an EB-1A is the only visa that allows for self-petition. 

Of course, I could be way off-base in my theory. But given the evidence amassed to date, it seems like the most likely explanation.

To repeat, I did give Shi and his associates several chances to set the record the straight — but again, no reply. 

For now, if you know Bruce Shi or Thrones Investment LLC, please contact me and tell me your story. If you can find Thrones Capital or “AI Trading Hedge Fund” in your manager database, send me the information. 

Like I said, there is nothing better than a hedge fund mystery.

This article originally appeared in Institutional Investor in September 2019.

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