In this article we will check out the progression of hedge fund sentiment towards TAL Education Group (NYSE:TAL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is TAL Education Group (NYSE:TAL) a safe investment right now? Hedge funds are in an optimistic mood. The number of bullish hedge fund positions inched up by 8 recently. Our calculations also showed that TAL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). TAL was in 38 hedge funds’ portfolios at the end of March. There were 30 hedge funds in our database with TAL holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are dozens of tools investors can use to grade their stock investments. A couple of the most under-the-radar tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can beat the S&P 500 by a solid amount (see the details here).
Glen Kacher of Light Street Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the fresh hedge fund action encompassing TAL Education Group (NYSE:TAL).
How are hedge funds trading TAL Education Group (NYSE:TAL)?
At the end of the first quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TAL over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Hillhouse Capital Management held the most valuable stake in TAL Education Group (NYSE:TAL), which was worth $399.7 million at the end of the third quarter. On the second spot was Tiger Global Management LLC which amassed $306.9 million worth of shares. Yiheng Capital, Tybourne Capital Management, and Tairen Capital 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 31.32% of its 13F portfolio. Yiheng Capital is also relatively very bullish on the stock, designating 19.79 percent of its 13F equity portfolio to TAL.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Renaissance Technologies, initiated the most outsized position in TAL Education Group (NYSE:TAL). Renaissance Technologies had $32 million invested in the company at the end of the quarter. Glen Kacher’s Light Street Capital also initiated a $23.2 million position during the quarter. The other funds with new positions in the stock are Hyder Ahmad’s Broad Peak Investment Holdings, Stanley Druckenmiller’s Duquesne Capital, and Brandon Haley’s Holocene Advisors.
Let’s check out hedge fund activity in other stocks similar to TAL Education Group (NYSE:TAL). We will take a look at Ross Stores, Inc. (NASDAQ:ROST), HCA Healthcare Inc (NYSE:HCA), SBA Communications Corporation (NASDAQ:SBAC), and Monster Beverage Corp (NASDAQ:MNST). This group of stocks’ market values are closest to TAL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ROST | 49 | 982341 | 1 |
| HCA | 87 | 2171218 | 24 |
| SBAC | 46 | 1835315 | 1 |
| MNST | 43 | 1843978 | -2 |
| Average | 56.25 | 1708213 | 6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 56.25 hedge funds with bullish positions and the average amount invested in these stocks was $1708 million. That figure was $1801 million in TAL’s case. HCA Healthcare Inc (NYSE:HCA) is the most popular stock in this table. On the other hand Monster Beverage Corp (NASDAQ:MNST) is the least popular one with only 43 bullish hedge fund positions. Compared to these stocks TAL Education Group (NYSE:TAL) is even less popular than MNST. Hedge funds dodged a bullet by taking a bearish stance towards TAL. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately TAL wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); TAL investors were disappointed as the stock returned 6% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
