Polen Capital Management, a high-conviction growth investment management firm, published its “Polen International Growth Fund” fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 4.79% was recorded by the fund in the fourth quarter of 2020, below its MSCI All Country World benchmark that delivered a 17.02% return in the same period. For the full year of 2020, the Portfolio returned 12.75% versus 10.65% for the Index. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Polen International Growth Fund, in their Q4 2020 investor letter, mentioned New Oriental Education & Technology Group Inc. (NYSE: EDU) and emphasized their views on the company. New Oriental Education & Technology Group Inc. is a Beijing, China-based private educational services provider that currently has a $23.6 billion market capitalization. Since the beginning of the year, EDU delivered a -25.43% return, while its 12-month gains are still up by 27.11%. As of March 26, 2021, the stock closed at $14.23 per share.
Here is what Polen International Growth Fund has to say about New Oriental Education & Technology Group Inc. in their Q4 2020 investor letter:
“New Oriental Education & Technology Group, one of China’s largest afterschool tutoring and education companies, performed well during the quarter. Though the pandemic momentarily disrupted the company’s physical tutoring center operations at the start of the year, the company quickly transitioned all those students over to online or hybrid classes. Now, thanks to China’s extreme measures to combat COVID, the virus appears to be contained, and New Oriental has reopened almost all of its schools. In the wake of the pandemic, New Oriental gained market share from weaker competitors who either went out of business or could not provide continuous classes via online solutions. This outperformance against competitors became even more apparent during the fourth quarter of 2020, driving the share price appreciation.
New Oriental’s core K-12 business returned to high single-digit growth during the last reported quarter while profitability rebounded back into the mid-teens. As guidance for the fourth quarter suggests, the core business likely continued to strengthen back toward a normalized 25%+ growth rate, far outpacing the industry’s single-digit growth. New Oriental’s business should also gain from the vaccine rollout and eventual relaxing of COVID restrictions. We expect this will boost demand for both its domestic classes and its business, which helps Chinese students prepare for and get accepted into foreign universities. If these recovery trends continue, we estimate earnings growth of approximately 25% in the coming five years.”
Our calculations show that New Oriental Education & Technology Group Inc. (NYSE: EDU) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, New Oriental Education & Technology Group Inc. was in 43 hedge fund portfolios, compared to 40 funds in the third quarter. LEU delivered a -19.21% return in the past 3 months.