Asian hedge funds piled to China education, U.S. AI shares in Q1

New Oriental Education & Technology

16/05/2023 10:59

By Summer Zhen
       HONG KONG, May 16 (Reuters) - 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  EDU.N  and TAL Education  TAL.N , 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. 
    Share prices of both New Oriental and TAL collapsed over 90%
from its peak after Beijing’s ban on K-12 private tutoring. The
price of two stocks have doubled from the low point in October
after China dropped its strict controls against COVID-19.
    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. 
    Another consensus buy during the first quarter was the big
artificial intelligence (AI) players in the United States. 
    Trivest Advisors, which has assets under management of over
$3 billion, purchased roughly 800,000 shares in Nvidia Corp
 NVDA.O , to build a new position in the world's leading
designer of computer chips used in creating AI. The Hong
Kong-based fund also significantly added Meta Platforms Inc
 META.O  and Microsoft Corp  MSFT.O . Its top three U.S. listed
holdings by the end of the March-end were all betting on AI, in
order Meta, Microsoft and Nvidia.  
    Similarly, Greenwoods scooped up Nvidia, Microsoft, and
Google parent Alphabet Inc  GOOGL.O  during the quarter. During
an investor seminar in March, Jin Meiqiao, a portfolio manager
at Greenwoods, said ChatGPT is a revolutionary product and thus
the fund has made allocations to the related infrastructure
field. 
    “Apparently fund managers are looking for the future
investment themes and they have higher convictions in U.S. AI
areas in terms of technology advantage and scenarios of
applications,” said Linus Yip, chief strategist at First
Shanghai Securities.

 (Reporting by Summer Zhen; Editing by Simon Cameron-Moore)
 ((summer.zhen@thomsonreuters.com; 852-3462-7739;))