Tairen Capital’s Biggest Moves On Consumer Stocks in Q3

Tairen Capital is a long/short equity hedge fund that was founded by Larry Chen and Terry Zhang in 2007. Its 13F portfolio at the end of the third quarter was $424 million with the top 10 holdings constituting 74% of the total portfolio size. It is one of the largest hedge funds located in the Greater China and Hong Kong region. A large number of its holdings are Asian companies given the background of the founders. At the end of the third quarter, the technology and consumer discretionary sectors accounted for the largest portfolio allocation for this fund. In the article below we look at the some of the major consumer stocks in Tairen Capital’s portfolio.

Last month we took a look at the performance of Tairen Capital’s second quarter picks. Our calculations showed that Tairen Capital’s Q2 picks returned more than 28% during the third quarter thanks to its positions in Alibaba and Amazon.com, Inc. (NASDAQ:AMZN).

At Insider Monkey, we track around 730 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).

Ljupco Smokovski/Shutterstock.com

New Oriental Education & Tech Grp. Inc (NYSE:EDU) was one of the top purchases by Tairen Capital during the last quarter. The fund held 724,490 shares of this stock valued at $33 million at the end of the third quarter and it was the 4^th largest holding of this fund. This company provides private educational services in China. It offers a diversified set of educational services which include language training and test preparation, primary and secondary school education, online education, content development and distribution, pre-school education, overseas study consulting services and study tours. The stock is trading near the top of its 52 week range and has given a stellar return of almost 80% over the last one year. The company reported revenues of $1.47 billion last year with net income of $224 million. The trailing P/E of New Oriental Education & Tech Grp. (ADR)(NYSE:EDU) is ~36x with a dividend yield of 0.4%. At the end of the third quarter, about 20 funds from our system held shares worth $288 million in this stock.