Most education-related stocks, particularly for-profit education stocks, have been weighted by declining enrollment and increased regulatory scrutiny in recent years. For-profit education providers have been criticized for boosting enrollment in order to add to their top-line figures without taking into account student qualification. As a result, critics have been saying that numerous students graduate with massive amounts of debt and inadequate skills to find a job in a highly-competitive job market to pay back their debt. While this is one of the reasons investors might have been ignoring education-related stocks in recent years, one should bear in mind that individual companies and their individual stories may show different growth prospects. That’s why Insider Monkey decided to compile a list of five education stocks favored by the hedge funds tracked by our team.
At Insider Monkey, we track around 760 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
#5. TAL Education Group (ADR) (NYSE:XRS)
– Number of investors with long positions as of March 31: 19
– Aggregate value of investors’ holdings as of March 31: $336.06 Million
TAL Education Group (ADR) (NYSE:XRS) received more attention from the hedge funds monitored by Insider Monkey during the first quarter of 2016, as the number of funds invested in the company rose to 19 from 14 quarter-over-quarter. Similarly, the dollar value all those funds’ equity investments in TAL Education increased to $336.06 million from $323.24 million during the quarter. The provider of K-12 after-school tutoring services in China has seen its market value climb 18% since the beginning of 2016. The company’s student enrollments increased from 1.07 million at the end of February of 2014 to nearly 2.31 million at the end of February of this year. At the same time, TAL Education’s net revenue for the fiscal year ended February 29, 2016 reached $619.9 million, up from $313.9 million recorded for fiscal year that ended February 28, 2014. Tiger Global Management LLC, founded by Chase Coleman, owns 1.72 million American Depositary Shares of TAL Education Group (ADR) (NYSE:XRS) as of the end of March.