Why a Fund Dumped a $24 Million China Education Stock While Keeping a Big Position in TAL

June 1, 2026 - 03:33

A major investment fund recently made a notable move in the Chinese education sector, selling off its entire stake in New Oriental Education worth roughly $24 million while maintaining a large position in rival TAL Education Group. The decision highlights a growing divergence in how investors view these two once-dominant players in China's private tutoring market.

New Oriental, known for its language training and test prep services across China, has struggled to regain its footing after the government's sweeping crackdown on for-profit tutoring in 2021. While the company has pivoted toward adult education and non-academic tutoring, revenue remains well below pre-crackdown levels. The fund's exit suggests doubts about New Oriental's ability to scale its new business lines quickly enough to justify its current valuation.

In contrast, TAL Education has shown more aggressive adaptation. The company has leaned into intelligent learning devices and content licensing, which carry higher margins and less regulatory risk. TAL also reported a narrower loss in its most recent quarter, signaling that its restructuring may be gaining traction. The fund's decision to keep its TAL position indicates a bet that the company's tech-focused turnaround will outperform New Oriental's more traditional service model.

Analysts note that the Chinese education sector remains highly unpredictable due to ongoing regulatory shifts. However, the fund's selective approach suggests that not all education stocks are viewed equally. For now, TAL appears to be the preferred survivor in a market that has left many investors cautious.