Here's Why Hayden Capital Sold Its Position in New Oriental Education (EDU)

Hayden Capital, an investment management firm, released its fourth-quarter 2025 investment letter. A copy of the letter can be downloaded here. 2025 proved how unpredictable markets can be in the short term. Markets displayed broad strength, highlighting their resilience. U.S. equities saw double-digit gains, while international markets performed even better. Remarkably, international stocks outpaced their U.S. counterparts for the first time since 2017. The firm had a productive 2025, especially as investor capital focused on anything related to AI, while other sectors were labeled as “AI losers.” In Q4 2025, the portfolio returned -12.9% compared to the S&P 500's +2.7% and MSCI World's +3.3%. The portfolio had returned +14.8% annualized after fees, since inception, compared to the S&P 500’s +13.5% and MSCI World’s +10.3% return. Approximately 42% of the portfolio is invested in Asia, ~41% in North America, ~16% in Latin America, and the rest in cash. Due to the influence of AI, the market is responding more to fear and rising uncertainty about the future rather than to facts. In addition, please check the firm’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Hayden Capital highlighted stocks like New Oriental Education & Technology Group Inc. (NYSE:EDU). New Oriental Education & Technology Group Inc. (NYSE:EDU) facilitates private education services in the People's Republic of China under the New Oriental brand. On February 26, 2026, New Oriental Education & Technology Group Inc. (NYSE:EDU) stock closed at $55.74 per share. One-month return of New Oriental Education & Technology Group Inc. (NYSE:EDU) was -7.68%, and its shares gained 15.93% over the past 52 weeks. New Oriental Education & Technology Group Inc. (NYSE:EDU) has a market capitalization of $9.12 billion.

Hayden Capital stated the following regarding New Oriental Education & Technology Group Inc. (NYSE:EDU) in its fourth quarter 2025 investor letter:

"New Oriental Education & Technology Group Inc. (NYSE:EDU): We sold the last of our New Oriental position this quarter. The opportunity first appeared in 2022, after a brutal stretch for the company. China had launched a sweeping regulatory crackdown on the afterschool tutoring sector in 2021 (discussed in our Q2 2021 letter; LINK), and shares were then hit again as investors fled Chinese markets during the 2022 bear market. In total, the stock plummeted 96% from peak to trough in just over a year. Most investors wrote the company off as “uninvestable”.

But when we took a closer look that Fall, we saw something different: a company that had stabilized its operations and was positioning itself on the right side of a turnaround. Management had launched several new non-academic business lines – robotics, coding, arts, sports – and even found an unexpected hit in live-streaming through its Koolearn subsidiary, powered by the captive personality of one of its former star instructors.

Management was confident the worst was behind them. They believed nearly all planned tutoring center closures were complete, the regulatory overhang was lifting, and they forecasted a return to profitability by the following quarter. They backed up that conviction by returning roughly $700 million to shareholders through a combination of share buybacks and debt repurchases..." (Click here to read the full text)

New Oriental Education & Technology Group Inc. (NYSE:EDU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 33 hedge fund portfolios held New Oriental Education & Technology Group Inc. (NYSE:EDU) at the end of the fourth quarter, up from 28 in the previous quarter. While we acknowledge the potential of New Oriental Education & Technology Group Inc. (NYSE:EDU) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered New Oriental Education & Technology Group Inc. (NYSE:EDU) and shared a list of top Chinese companies on US exchanges. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.