On Tuesday Feb. 25th, Chase Coleman and Feroz Dewan’s Tiger Global Management Llc reported a substantial decrease in its position at TAL Education Group (ADR) (NYSE:XRS). Over the past 15 days, the fund sold 2 million shares of the company for prices ranging from $23.99 per share to $24.99 per share. After the reported transactions, the fund holds 2.95 million class A shares, compared to 4.95 million, before these moves. Tiger’s activist stake amasses 4.3% of TAL Education’s Class A stock.
Through its latest move, Tiger Global reduced its position on TAL Education Group (ADR) (NYSE:XRS) -a Chinese K-12 after-school tutoring service provider with a market cap slightly under $2 billion- by more than 40%. However, the sale should not be seen as a bearish signal from the fund, but rather like an attractive opportunity to make some profit. The company’s stock has jumped by about 175% over the past year, on the back of industry leading fundamentals and a cheap valuation. Moreover, trading at 40 times the company´s earnings, this stock might look slightly overvalued, but it is, in fact, cheap compared to the industry average of 103x P/E.
Finally, I would like to highlight that, despite the recent activity, Tiger Global continues to be the largest hedge-fund shareholder at TAL Education Group (ADR) (NYSE:XRS). Nonetheless, other major funds, including Robert Karr’s Joho Capital, Christopher Lyle’s Scge Management and Jim Simons’ Renaissance Technologies, also hold millionaire stakes in the company. In fact, these last two funds last declared having upped their bets on TAL Education Group (ADR) (NYSE:XRS).
Tiger Global Management is a fundamentally-oriented services-focused hedge fund with assets under management of approximately $8 billion. It tends to seek for ten-year investment opportunities, mainly in the global Internet and technology sectors. Managed by Chase Coleman and Feroz Dewan, two “youngsters,” it has returned 71% after fees in 2007. In fact, by the end of 2007 Tiger Global’s annualized return since inception was around 44%. Although 2008 and 2009 were tough years, Chase Coleman and his team are back on track, having returned 45% in 2011, 23% in 2012, and 14% in 2013.
A few days ago, we analyzed Tiger Global’s main holdings and latest moves. The fund had already reduced its stakes in two of its major holdings: Motorola Solutions Inc (NYSE:MSI) and Groupon Inc (NASDAQ:GRPN). It diminished its bets by 20% and 36%, respectively. On the opposite, it had reported increasing its participation in Priceline.com Inc (NASDAQ:PCLN), Twenty-First Century Fox Inc (NASDAQ:FOXA) and Dollar General Corp. (NYSE:DG).
Disclosure: Javier Hasse holds no position in any stocks mentioned