Mawer Investment Management, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 3.5% was recorded by the Mawer International Equity Fund for the second quarter of 2021, trailing the International Equity Benchmark, which returned 3.9% for the same period. On the other hand, the Mawer U.S. Equity Fund delivered a 5.7% return, trailing the S&P 500 Index’s 6.9% return for the second quarter. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Mawer Investment Management, the fund mentioned New Oriental Education & Technology Group Inc. (NYSE: EDU) and discussed its stance on the firm. New Oriental Education & Technology Group Inc. is a Haidian District, Beijing, China-based educational services provider with a $3.1 billion market capitalization. EDU delivered a -89.96% return since the beginning of the year, while its 12-month returns are down by -87.33%. The stock closed at $1.94 per share on September 27, 2021.
Here is what Mawer Investment Management has to say about New Oriental Education & Technology Group Inc. in its Q2 2021 investor letter:
“By contrast, areas of weakness highlighted the unevenness of the global recovery and the ongoing impact COVID-19 is having on business models. We are also noticing weakness in companies where the potential for a change in regulations could impact the industry in which they operate. After school tutoring service New Oriental Education and Technology Group are (one of the) two companies that exhibited weakness this quarter given the potential for increased regulation impacting their business models.”
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Based on our calculations, New Oriental Education & Technology Group Inc. (NYSE: EDU) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. EDU was in 39 hedge fund portfolios at the end of the first half of 2021, compared to 45 funds in the previous quarter. New Oriental Education & Technology Group Inc. (NYSE: EDU) delivered a -77.71% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
