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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Four Seasons Education (Cayman) Inc. (NYSE:FEDU) based on those filings.
Hedge fund interest in Four Seasons Education (Cayman) Inc. (NYSE:FEDU) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Nephros, Inc. (NASDAQ:NEPH), PFSweb, Inc. (NASDAQ:PFSW), and ClearPoint Neuro Inc. (NASDAQ:CLPT) to gather more data points. Our calculations also showed that FEDU isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Gifford Combs of Dalton Investments[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to check out the fresh hedge fund action regarding Four Seasons Education (Cayman) Inc. (NYSE:FEDU).
What have hedge funds been doing with Four Seasons Education (Cayman) Inc. (NYSE:FEDU)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FEDU over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Run Ye, Junji Takegami and Hoyon Hwang's Tiger Pacific Capital has the biggest position in Four Seasons Education (Cayman) Inc. (NYSE:FEDU), worth close to $0.7 million, amounting to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Robert Karr of Joho Capital, with a $0.6 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism include Gifford Combs's Dalton Investments, Renaissance Technologies and . In terms of the portfolio weights assigned to each position Dalton Investments allocated the biggest weight to Four Seasons Education (Cayman) Inc. (NYSE:FEDU), around 0.26% of its 13F portfolio. Tiger Pacific Capital is also relatively very bullish on the stock, setting aside 0.22 percent of its 13F equity portfolio to FEDU.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Four Seasons Education (Cayman) Inc. (NYSE:FEDU) but similarly valued. We will take a look at Nephros, Inc. (NASDAQ:NEPH), PFSweb, Inc. (NASDAQ:PFSW), ClearPoint Neuro Inc. (NASDAQ:CLPT), and Flotek Industries Inc (NYSE:FTK). This group of stocks' market values match FEDU's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NEPH,5,23181,1 PFSW,5,9411,-1 CLPT,3,382,3 FTK,8,8066,-1 Average,5.25,10260,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $2 million in FEDU's case. Flotek Industries Inc (NYSE:FTK) is the most popular stock in this table. On the other hand ClearPoint Neuro Inc. (NASDAQ:CLPT) is the least popular one with only 3 bullish hedge fund positions. Four Seasons Education (Cayman) Inc. (NYSE:FEDU) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately FEDU wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FEDU investors were disappointed as the stock returned 4.8% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.