Investors are Shorting These 5 Chinese Stocks

1. TAL Education Group (NYSE:TAL)

Float Shorted: 7.41%

Number of Hedge Fund Holders: 14

TAL Education Group (NYSE:TAL) is a Beijing, China-based provider of after-school education and tutoring for students in primary and secondary schools. TAL Education Group (NYSE:TAL) was held by 14 hedge funds at the end of Q1 2022.

On July 29, TAL Education Group (NYSE:TAL) reported a decline in revenue of 84% YoY to $224 million. The significant dip in revenue follows the Chinese government’s decision to crackdown on private tutoring. Meanwhile, the bottom line results for TAL Education Group (NYSE:TAL) also suffered heavily, falling by 50% YoY. The Chinese government has justified the ban on tutoring by saying that it will reduce the pressure on students who are forced to get additional classes to excel in the highly competitive Chinese education system.

As of July 14, around 48.08 million shares of TAL Education Group (NYSE:TAL) were sold short, equivalent to 7.41% of the total float. It would require nearly 5.8 days to cover the short interest in the company based on the average daily trading volume of 8.3 million shares.

TAL Education Group (NYSE:TAL) was discussed in the Q3 2021 investor letter of Tao Value. Here’s what the firm said:

“On the other hand, TAL Education (TAL)’s value is largely destroyed by the policy officially released on 7/24/2021, which essentially outlawed for-profit curriculum-related after school tutoring (which is TAL’s main business). It is a hard lesson learned here that government related risk is a substantial one, especially for Chinese businesses.”

You can also take a peek at 10 Best Dividend Stocks to Buy in 2022 and Cathie Wood’s 10 Favorite Stock Picks For The Rest of 2022.

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