Tiger Global and Groupon, Icahn and Netflix: Hedge Funds are Making Major Moves

ICAHN CAPITAL LPFiling season is here again, and investors get a sneak peek at what stocks the world’s most successful money managers are picking. We’ve gone through some extensive coverage of various 13F reports over the past few days, and while it’s tempting to ignore hedge fund sentiment, our empirical research shows that it would be foolhardy to do so. According to multiple bodies of research, investors who mimic hedge funds’ best ideas can beat the market by double-digit percentage points each year, assuming they know how to track these picks. Here’s a better look at this strategy, but today, we’re going to take a look at some notable amendments that have been filed with the SEC.

Tiger Global loves Groupon. As we originally discussed last week, Tiger Global, the mega-hedge fund with Chase Coleman and Feroz Dewan at the helm, recently undertook a massive stake in Groupon Inc (NASDAQ:GRPN). In its latest 13F filing, Tiger Global reported that it had initiated a new position in the third quarter, despite the fact that the stock has lost nearly 85% of its value year to date. In a more recent schedule 13G filing with the SEC, Tiger Global disclosed the details on its position, i.e. that it holds a whopping 9.9% stake in the daily deal company’s common stock.

Officially worth $202.1 million based on Groupon’s last stock price, this news is huge, and may be driven by the company’s push to open concept stores where its customers can physically test products. Its first store opened in Hong Kong this week. At a bargain bin valuation of 12.9 times forward earnings, Groupon is cheap, and sell-side analysts expect 25-30% growth in annual EPS over the next five years.

Icahn exercises call options on Netflix. At the end of the third quarter, Carl Icahn reported holding $68 million worth of Netflix, Inc. (NASDAQ:NFLX), and the billionaire’s position in the company has spiked as of late. In an amended 13D filing this week, Icahn disclosed that he exercised call options on the streaming content company, and still owns $450.8 million worth, good for a shave under 10% of Netflix’s outstanding shares.

Icahn originally announced a 9.98% stake in the company on October 31st, which leads one to deduce that the hedge fund manager must have sold some shares at a higher price, thereby replacing them with his call options. Netflix’s stock price had risen nearly 17% after Icahn’s original purchase, allowing him to see a nice profit while his takeover battle ensues.

It’s no secret that Icahn is pressuring the company’s management for a sale to a larger tech player, but Reed Hastings and co. initiated a so-called “poison pill” defense mechanism earlier this month, where the company can send new shares into the markets. This, in effect, would make an acquisition more costly. Icahn has called the plan, which is activated if an individual acquires more than 10% of the company, ” discriminatory.”

In comparison to competitors like Redbox owner Coinstar, Inc. (NASDAQ:CSTR) and Amazon.com, Inc. (NASDAQ:AMZN), who is still fine-tuning its streaming service, Netflix has decent growth prospects. Sell-side analysts expect the company to experience EPS growth of 23.2% a year over the next half-decade, which is close to half of its previous five-year average, but above Coinstar (17.4%). Amazon, meanwhile, is expected to see annual EPS growth of 34.1% over this time frame, but its shares trade at a much more expensive growth multiple — a PEG of nearly 100.0. Netflix currently sports a PEG of 4.4, while Coinstar looks to be the most attractive, at 0.5.

Steadfast Capital downsizes OpenTable. At the end of the second quarter, Robert Pitts and Steadfast Capital Management held a little over $58.4 million worth of OpenTable Inc. (NASDAQ:OPEN) and in its latest 13F filing with the SEC, the New York-based hedge fund downsized this position to $53.9 million. In a schedule 13G this week, Pitts’s fund cut his holdings in the restaurant e-reservation company again, and now holds close to 80% worth of his Q3 position.

While Steadfast still owns 4.5% of OpenTable’s common stock outstanding, we can’t help but see the fund’s moves as bearish. Shares of the company have gained close to 11% in 2012 thus far, but aren’t too attractive from a valuation standpoint, trading at elevated trailing (43.4X) and forward (22.6X) earnings multiples. At its current price in the mid $43 range, OpenTable is closing in on targets set by Oppenheimer ($46) and Benchmark ($49), showing that even in the most bullish of scenarios, moderate appreciation is all that looks to be in store for this stock at the moment.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!