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Strategic Education, Inc. (STRA): Are Hedge Funds Right About This Stock?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 30 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 6.7% through November 15th whereas the S&P 500 Index ETF gained only 2.6% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Strategic Education, Inc. (NASDAQ:STRA) from the perspective of those elite funds.

Is Strategic Education, Inc. (NASDAQ:STRA) a buy right now? The best stock pickers are taking an optimistic view. The number of long hedge fund bets improved by 3 recently. Our calculations also showed that stra isn’t among the 30 most popular stocks among hedge funds. STRA was in 15 hedge funds’ portfolios at the end of the third quarter of 2018. There were 12 hedge funds in our database with STRA positions at the end of the previous quarter.

If you’d ask most shareholders, hedge funds are seen as underperforming, outdated investment vehicles of the past. While there are more than 8,000 funds with their doors open at the moment, Our experts look at the bigwigs of this group, approximately 700 funds. These money managers shepherd the majority of the hedge fund industry’s total capital, and by keeping an eye on their highest performing stock picks, Insider Monkey has spotted a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

VALUEACT CAPITAL

We’re going to take a look at the new hedge fund action encompassing Strategic Education, Inc. (NASDAQ:STRA).

What does the smart money think about Strategic Education, Inc. (NASDAQ:STRA)?

Heading into the fourth quarter of 2018, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in STRA at the beginning of this year. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

No of Hedge Funds with STRA Positions

The largest stake in Strategic Education, Inc. (NASDAQ:STRA) was held by Renaissance Technologies, which reported holding $129.7 million worth of stock at the end of September. It was followed by Royce & Associates with a $62.9 million position. Other investors bullish on the company included ValueAct Capital, Citadel Investment Group, and Two Sigma Advisors.

Consequently, specific money managers have jumped into Strategic Education, Inc. (NASDAQ:STRA) headfirst. G2 Investment Partners Management, managed by Josh Goldberg, assembled the biggest position in Strategic Education, Inc. (NASDAQ:STRA). G2 Investment Partners Management had $2.2 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $2 million position during the quarter. The following funds were also among the new STRA investors: Brandon Haley’s Holocene Advisors, Mike Vranos’s Ellington, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Strategic Education, Inc.(NASDAQ:STRA) but similarly valued. These stocks are Houlihan Lokey Inc (NYSE:HLI), Jagged Peak Energy Inc. (NYSE:JAG), LendingTree, Inc (NASDAQ:TREE), and NorthWestern Corporation (NYSE:NWE). All of these stocks’ market caps are similar to STRA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HLI 14 205633 -4
JAG 15 93556 5
TREE 18 69523 -1
NWE 15 135790 2
Average 15.5 126126 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $256 million in STRA’s case. LendingTree, Inc (NASDAQ:TREE) is the most popular stock in this table. On the other hand Houlihan Lokey Inc (NYSE:HLI) is the least popular one with only 14 bullish hedge fund positions. Strategic Education, Inc. (NASDAQ:STRA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TREE might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.

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