There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Tarena International Inc (ADR) (NASDAQ:TEDU).
Tarena International Inc (ADR) (NASDAQ:TEDU) has experienced a decrease in activity from the world’s largest hedge funds recently. At the end of this article we will also compare TEDU to other stocks, including Winthrop Realty Trust (NYSE:FUR), CBIZ, Inc. (NYSE:CBZ), and Shopify Inc (NYSE:SHOP) to get a better sense of its popularity.
To most traders, hedge funds are assumed to be slow, old financial vehicles of the past. While there are over 8000 funds trading today, Our experts choose to focus on the top tier of this club, approximately 700 funds. These hedge fund managers preside over bulk of the hedge fund industry’s total asset base, and by monitoring their top investments, Insider Monkey has brought to light several investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s review the latest action surrounding Tarena International Inc (ADR) (NASDAQ:TEDU).
What does the smart money think about Tarena International Inc (ADR) (NASDAQ:TEDU)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 29% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Thomas E. Claugus’s GMT Capital has the biggest position in Tarena International Inc (ADR) (NASDAQ:TEDU), worth close to $4.8 million and amounting to 0.1% of its total 13F portfolio. On GMT Capital’s heels is Indus Capital, managed by David Kowitz and Sheldon Kasowitz, which holds a $1.2 million stake; 0.2% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism contain Gifford Combs’s Dalton Investments, Warren Lammert’s Granite Point Capital and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Because Tarena International Inc (ADR) (NASDAQ:TEDU) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that elected to cut their full holdings heading into Q4. Interestingly, Emanuel J. Friedman’s EJF Capital dumped the largest investment of the 700 funds watched by Insider Monkey, totaling close to $1.6 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund sold off about $0.4 million worth of TEDU shares. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Tarena International Inc (ADR) (NASDAQ:TEDU) but similarly valued. These stocks are Winthrop Realty Trust (NYSE:FUR), CBIZ, Inc. (NYSE:CBZ), Shopify Inc (NYSE:SHOP), and Francesca’s Holdings Corp (NASDAQ:FRAN). This group of stocks’ market caps match TEDU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FUR | 23 | 134179 | -1 |
| CBZ | 14 | 63452 | 1 |
| SHOP | 10 | 50250 | -3 |
| FRAN | 18 | 136365 | 0 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was a meager $8 million in TEDU’s case. Winthrop Realty Trust (NYSE:FUR) is the most popular stock in this table, while Shopify Inc (NYSE:SHOP) is the laggard with only 10 bullish hedge fund positions. Compared to these stocks Tarena International Inc (ADR) (NASDAQ:TEDU) is even less popular than SHOP. 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.