Trade War Couldn’t Stop Hedge Funds From Buying These Chinese Stocks

 TAL Education Group (NYSE:TAL)

Number of Hedge Fund Shareholders of TAL Education Group (NYSE:TAL) (as of June 30): 30

Value of Hedge Funds’ Holdings in TAL Education Group (NYSE:TAL) (as of June 30): $897.56 million

Hedge fund ownership of TAL Education Group (NYSE:TAL) among the funds tracked in our database rose by 20% during the second quarter to 30 hedge funds. Those funds owned just under $900 million worth of TAL shares on June 30. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, opened the largest new position in TAL Education Group (NYSE:TAL) during the June quarter, consisting of 585,429 shares.

The value of TAL Education Group (NYSE:TAL) shares have been cut in half since early-June as investors have become concerned over new regulations that will hit after-school educational institutions like TAL with more stringent guidelines and operating standards. Institutions will need to be authorized and provide a detailed accounting of their curriculums and schedules. The extracurricular schooling market in China is worth more than $117 billion, playing host to more than 137 million students in 2016.

Momo Inc (NASDAQ:MOMO)

Number of Hedge Fund Shareholders of Momo Inc (NASDAQ:MOMO) (as of June 30): 31

Value of Hedge Funds’ Holdings in Momo Inc (NASDAQ:MOMO) (as of June 30): $913.26 million

A net total of ten hedge funds added Momo Inc (NASDAQ:MOMO) to their 13F portfolios in the second quarter, while the collective value of their positions more than doubled in value to over $913 million. New shareholders of Momo included Cliff Asness‘ AQR Capital Management (352,289 shares) and Daniel Lascano‘s Lomas Capital Management (171,948 shares).

Noted short seller Spruce Point Capital hit Momo Inc (NASDAQ:MOMO) shares with a strong sell recommendation at the end of June, which helped cool them off after a torrid first-half of 2018. Momo Inc (NASDAQ:MOMO) shares are up by nearly 50% year-to-date nonetheless, thanks to the online dating and social video platform’s 58% surge in Q2 revenue ($494.3 million) alongside a 90% surge in earnings ($0.66).

 Ctrip.Com International Ltd (NASDAQ:CTRP)

Number of Hedge Fund Shareholders of Ctrip.Com International Ltd (NASDAQ:CTRP) (as of June 30): 32

Value of Hedge Funds’ Holdings in Ctrip.Com International Ltd (NASDAQ:CTRP) (as of June 30): $2.42 billion

Lastly is Ctrip.Com International Ltd (NASDAQ:CTRP), which fell heavily out of favor among the hedge funds that we track between the end of the first quarters of 2016 and 2018, as hedge fund ownership plummeted to 21 from 67 during that two-year period. That figure rebounded somewhat in the second quarter of 2018, jumping to 32 by the end of June from 21. Crispin Odey‘s Odey Asset Management Group (35,000 shares) and Paul Tudor Jones‘ Tudor Investment Corp (46,622 shares) were among the funds adding Ctrip to their 13F portfolios.

As with Alibaba and numerous other Chinese stocks, Ctrip.Com International Ltd (NASDAQ:CTRP) shares have been beaten down since early-June, sliding by nearly 33%. And like TAL, Ctrip is also facing the looming specter of broad Chinese regulations, which are poised to strike the online tourism industry with heightened safety and insurance requirements following the deadly July sinking of two tourist boats in Thailand, which killed more than 40 Chinese tourists. Otherwise, the Chinese travel industry is headed in the right direction for Ctrip.Com International Ltd (NASDAQ:CTRP), with 130 million overseas trips being taken by Chinese citizens in 2017, who spent a total of $115 billion. Both figures represent greater than 1,000% increases since 2000.

Disclosure: None