Is Tarena International Inc (TEDU) A Good Stock To Buy?

Is Tarena International Inc (NASDAQ:TEDU) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is TEDU a good stock to buy? Prominent investors were taking a bullish view. The number of bullish hedge fund positions inched up by 2 in recent months. Tarena International Inc (NASDAQ:TEDU) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 12. Our calculations also showed that TEDU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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 take a glance at the recent hedge fund action surrounding Tarena International Inc (NASDAQ:TEDU).

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

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in TEDU a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the number one position in Tarena International Inc (NASDAQ:TEDU). Renaissance Technologies has a $1.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Tarena International Inc (NASDAQ:TEDU), around 0.0023% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, earmarking 0.0002 percent of its 13F equity portfolio to TEDU.

As aggregate interest increased, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in Tarena International Inc (NASDAQ:TEDU). Millennium Management had $0.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.1 million position during the quarter.

Let’s now review hedge fund activity in other stocks similar to Tarena International Inc (NASDAQ:TEDU). These stocks are CooTek (Cayman) Inc. (NYSE:CTK), Penns Woods Bancorp, Inc. (NASDAQ:PWOD), Fusion Fuel Green PLC (NASDAQ:HTOO), Neptune Wellness Solutions Inc (NASDAQ:NEPT), Processa Pharmaceuticals, Inc. (NASDAQ:PCSA), Ocean Power Technologies Inc (NASDAQ:OPTT), and InflaRx N.V. (NASDAQ:IFRX). This group of stocks’ market caps resemble TEDU’s market cap.

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As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $2 million in TEDU’s case. InflaRx N.V. (NASDAQ:IFRX) is the most popular stock in this table. On the other hand Penns Woods Bancorp, Inc. (NASDAQ:PWOD) is the least popular one with only 1 bullish hedge fund positions. Tarena International Inc (NASDAQ:TEDU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TEDU is 26.4. 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. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on TEDU as the stock returned 15% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

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

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