Asian Hedge Funds Invested Majorly In Chinese Education Companies In Q1 2023

Large Asian hedge funds added Chinese education companies to their portfolios in the first quarter of 2023, and bought stocks in U.S. tech giants expected to benefit from ChatGPT and other artificial intelligence systems, regulatory filings showed.

Investors poured money into private tutoring leaders, including New Oriental and TAL Education, that have come through a near two-year crackdown in China on after-school education.

Hong Kong-based Greenwoods Asset Management bought 3.7 million of shares in New Oriental's U.S. listed American depositary receipts (ADRs), making it the second largest in the fund's U.S. listed holdings. Greenwoods also built a new position in TAL Education by acquiring 2.2 million shares.

TAL was also on Singapore-based FengHe’s shopping list. The fund run by ex-Alibaba CTO John Wu bought a further 2.1 million shares of the tutoring giant to build an existing position. It took some profit from New Oriental during the quarter, although the latter remains its second largest exposure in the U.S. market.

In China's current market conditions, education companies stand out as spending on education does not decline as household spending declines, as parents invested in their children's future, analysts say.

“The past quarter was the turning point for both New Oriental and TAL which offered very positive guidance for the next quarter and FY24,” Tina Li, an education analyst at BOCI research said in a note this week.

Other big investment firms including Tairen Capital, Dantai Capital, Keystone Investors and CloudAlpha Capital were also among the active buyers of U.S.-listed Chinese education companies, according to an analysis by Reuters based on the quarterly 13F filings to the U.S. Securities and Exchange Commission.

The 13F filings reveal what investors owned in U.S. listed stocks by March 31, giving some insight into the latest investment trends.