A hedge fund plans to profit off badly governed firms in Japan. Here's how

Zuhair Khan achieved some recognition in Japan over the past few years by ranking poorly governed companies at risk of scandal. Now, he’s looking to see whether the list can make any money as a new hedge fund at Union Bancaire Privee.

The yet-to-be-named long-short fund will seek out about 30 undervalued companies with good governance, while shorting roughly 60 richly valued businesses with weak oversight, said Khan, who recently left his position as head of research at Jefferies Japan Ltd. to start the new fund. It will debut by year-end, he said.

It’s essentially a bet that the quality of a