Is Strayer Education Inc (STRA) Going to Burn These Hedge Funds?

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Is Strayer Education Inc (NASDAQ:STRA) a bargain? The best stock pickers are definitely taking a bearish view. The number of bullish hedge fund bets shrunk by 2 recently. There were 13 hedge funds in our database with STRA holdings at the end of the previous quarter, versus 11 at the end of Q3. At the end of this article we will also compare STRA to other stocks including Meta Financial Group Inc. (NASDAQ:CASH), SunCoke Energy, Inc (NYSE:SXC), and InnerWorkings, Inc. (NASDAQ:INWK) to get a better sense of its popularity.

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Now, we’re going to take a gander at the fresh action regarding Strayer Education Inc (NASDAQ:STRA).

What have hedge funds been doing with Strayer Education Inc (NASDAQ:STRA)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards STRA over the last 5 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Goodnow Investment Group, led by Edward Goodnow, holds the largest position in Strayer Education Inc (NASDAQ:STRA). Goodnow Investment Group has a $23.2 million position in the stock, comprising 5.5% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, one of the largest hedge funds in the world, holding a $15.5 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of Ken Griffin’s Citadel Investment Group, Cliff Asness’ AQR Capital Management and D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually dumped their positions entirely. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp dumped the largest stake of the “upper crust” of funds followed by Insider Monkey, worth about $0.4 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund dumped about $0.4 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to Strayer Education Inc (NASDAQ:STRA). We will take a look at Meta Financial Group Inc. (NASDAQ:CASH), SunCoke Energy, Inc (NYSE:SXC), InnerWorkings, Inc. (NASDAQ:INWK), and Chromcraft Revington, Inc. (NYSEAMEX:CRC). This group of stocks’ market caps are similar to STRA’s market cap.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $50 million in STRA’s case. Chromcraft Revington, Inc. (NYSEAMEX:CRC) is the most popular stock in this table. On the other hand InnerWorkings, Inc. (NASDAQ:INWK) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Strayer Education Inc (NASDAQ:STRA) is even less popular than INWK. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.