A leading Chinese hedge fund, which has surged more than 800% over the past seven years, is taking advantage of the recent dip in Hong Kong-listed Chinese tech stocks, seeing their valuations as still attractive despite a strong rally this year, according to a report by Bloomberg.

Shenzhen Huaan Hexin Private Investment Fund Management Co, which manages nearly RMB6bn ($849m), increasied its holdings in the sector following a 14% two-day drop in the Hang Seng Tech Index last week. "This correction presents a buying opportunity," said Yuan Wei, founder and fund manager, in an interview. "Compared to their fundamentals, these stocks remain very cheap."

The firm’s flagship fund, Huaan Hexin Stable, jumped 35% in the final week of September, driven by a rally in internet stocks like Meituan, pushing its year-to-date return to 60% as of 30 September. Since its inception seven years ago, the fund has delivered a remarkable 825% gain, according to data from Shenzhen PaiPaiWang Investment & Management Co, which tracks Chinese hedge funds.

Chinese tech stocks have rebounded strongly since the Chinese government unveiled an economic stimulus package, benefiting hedge funds like Huaan Hexin that made significant bets on a sector previously targeted by short sellers. The Hang Seng Tech Index, which tracks 30 Chinese tech firms listed in Hong Kong, surged over 50% since mid-September before pulling back slightly this week.

“The market is recovering from extremely bearish levels, but it still looks undervalued,” said Yuan, who also indicated that his investments are primarily in Hong Kong-listed stocks, most of which have been held since last year. He also mentioned that his firm has started purchasing shares of a Chinese manufacturing company with promising growth potential and low valuations, though he declined to name the company.

Yuan has consistently topped PaiPaiWang’s rankings for the best 10-year returns among hedge funds, and he ranked as the third best-performing stock fund manager in the first nine months of this year.