Hedge Funds Are Coming Back To TAL Education Group (TAL)

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards TAL Education Group (NYSE:TAL).

TAL Education Group (NYSE:TAL) was in 38 hedge funds’ portfolios at the end of March. The all time high for this statistic is 41. TAL shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 29 hedge funds in our database with TAL holdings at the end of December. Our calculations also showed that TAL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Philippe Laffont of Coatue Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s review the new hedge fund action surrounding TAL Education Group (NYSE:TAL).

Do Hedge Funds Think TAL Is A Good Stock To Buy Now?

At Q1’s end, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 31% from one quarter earlier. On the other hand, there were a total of 38 hedge funds with a bullish position in TAL a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, Tiger Global Management LLC held the most valuable stake in TAL Education Group (NYSE:TAL), which was worth $310.3 million at the end of the fourth quarter. On the second spot was Yiheng Capital which amassed $215.5 million worth of shares. Serenity Capital, GQG Partners, and Fisher Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Serenity Capital allocated the biggest weight to TAL Education Group (NYSE:TAL), around 38.85% of its 13F portfolio. Panview Capital is also relatively very bullish on the stock, setting aside 13.58 percent of its 13F equity portfolio to TAL.

As industrywide interest jumped, key money managers were breaking ground themselves. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, initiated the most valuable position in TAL Education Group (NYSE:TAL). Alkeon Capital Management had $51.2 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also made a $26.9 million investment in the stock during the quarter. The other funds with brand new TAL positions are Matthew Hulsizer’s PEAK6 Capital Management, David Fear’s Thunderbird Partners, and Philippe Laffont’s Coatue Management.

Let’s now take a look at hedge fund activity in other stocks similar to TAL Education Group (NYSE:TAL). We will take a look at PACCAR Inc (NASDAQ:PCAR), TransDigm Group Incorporated (NYSE:TDG), Brown-Forman Corporation (NYSE:BF), Suncor Energy Inc. (NYSE:SU), BeiGene, Ltd. (NASDAQ:BGNE), Archer Daniels Midland Company (NYSE:ADM), and Motorola Solutions Inc (NYSE:MSI). This group of stocks’ market caps match TAL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.3 hedge funds with bullish positions and the average amount invested in these stocks was $2483 million. That figure was $1373 million in TAL’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 19 bullish hedge fund positions. TAL Education Group (NYSE:TAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TAL is 59.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately TAL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TAL were disappointed as the stock returned -53.8% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.