Were These Hedge Funds Wrong About Loading Up On TAL Education Group (TAL)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to TAL Education Group (NYSE:TAL) changed recently.

TAL Education Group (NYSE:TAL) has experienced an increase in enthusiasm from smart money recently. TAL Education Group (NYSE:TAL) was in 40 hedge funds’ portfolios at the end of June. The all time high for this statistics is 38. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 38 hedge funds in our database with TAL holdings at the end of March. Our calculations also showed that TAL isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Rajiv Jain of GQG Partners
Rajiv Jain of GQG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind let’s take a look at the recent hedge fund action encompassing TAL Education Group (NYSE:TAL).

What does smart money think about TAL Education Group (NYSE:TAL)?

Heading into the third quarter of 2020, a total of

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U.S. Universities Received Billions in Unreported Foreign Funds, Education Department Finds, Warning of ‘National Security Risk’

The Department of Education on Tuesday warned that funding from foreign adversaries at U.S. universities could pose a risk to national security in a report detailing its year-long investigation that found a number of universities had not appropriately reported funding received from entities in China, Qatar, and Russia.

Betsy DeVos wearing a blue shirt: U.S. Education Secretary Betsy Devos speaks in the Rose Garden at the White House in Washington, D.C., July 9, 2020.

© Kevin Lamarque/Reuters
U.S. Education Secretary Betsy Devos speaks in the Rose Garden at the White House in Washington, D.C., July 9, 2020.

The department found that “many large and well-resourced institutions of higher education have aggressively pursued and accepted foreign money,” while failing to properly report the funding.

“The Department’s investigations highlight the fact that foreign adversaries are likely targeting specific institutions for their R&D and technologies. This information highlights the critical national and economic security risks created by institutions’ failure to be fully transparent with respect to foreign gifts and contracts,” the 34-page report warned. 

The agency says foreign state and non-state actors have, for decades, “devoted significant resources to influence or control teaching and research, to the theft of intellectual property or even espionage, and to the use of American campuses as centers for propaganda operations and other projections of soft power.”

The report details the investigation the department began last year into whether U.S. universities are appropriately reporting foreign contracts and gifts that total more than $250,000 in one year. While it isn’t illegal to receive foreign funds, the universities must disclose the funding under Section 117 of the Higher Education Act of 1965 on foreign funding, which the department has worked to enforce with renewed vigor under the leadership of Secretary Betsy DeVos.

The report found that a university, which the Wall Street Journal has identified as Cornell University, had failed to report more than $1.2 billion in foreign funds to U.S. authorities in recent years. The university had not reported $760 million related to its campus in Qatar or roughly $1 million in contracts from Huawei Technologies, the “heavily state-influenced” Chinese technology firm.

Several schools initially failed to report receiving millions of dollars from Huawei, which the report says “became a household name not only because of its products’ international presence but because of these products’ potential enablement of foreign espionage.” The agency detailed how the Chinese Communist Party uses the firm to exert influence, including via a CCP committee baked into its corporate structure and $75 billion in support from the Chinese government. 

Huawei funded a number of initiatives in competitive industries such as robotics, semiconductors and online cloud services, the report said. Though most American universities stopped accepting funds from Huawei in 2018 based on U.S. officials’ concerns that the firm posed a national security risk, several schools were already locked into contracts with the company.

A school, which the Journal identified as MIT, has had roughly $11 million in contracts and agreements with Huawei since 2013, according to the report, funding an array of initiatives from research agreements to donations for specific projects and programs. 

The report said another school, which the

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