Shares of Chicago-based Groupon Inc (NASDAQ:GRPN) are up by more than 4.95% after an upgrade from Macquarie to ‘Outperform’ from an earlier ‘Neutral’ rating. The price target however was lowered to $7.00 from $7.75, though that still provides an upside of more than 36% from the current trading price of shares. The rationale behind this development was that shares were being oversold and have already fallen to the tune of 29% after the $3.29 billion provider of online discounts delivered its first quarter financial results. Groupon Inc (NASDAQ:GRPN)’s stock is still trading nearly 40% below its 52-week high and has lost about 38% of its value so far this year. This is much worse than the 3.16% average gains that the internet content & information industry has posted during the same time period.
Professional money managers probably realized the oversold nature of the stock, and hence the company saw a rise in interest from hedge funds during the first quarter, at least in terms of overall number of investors. Among the funds that we track, a total of 35 had invested about $419.70 million in Groupon Inc (NASDAQ:GRPN), as compared to 30 firms with $530.09 million at the end of the previous quarter. As you can see, the total value of their holdings did decline by over 20% during the quarter, though the shares fell by over 15% in value, so despite more investors, they collectively owned less shares.
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Another useful indicator of a company’s future prospects is insider trading. However, it must be noted that insider purchases are a much stronger indicator than insider selling, which can occur owing to a large set of reasons. Although no insider purchases have been detected in Groupon Inc (NASDAQ:GRPN) this year, prominent insider selling transactions include that by Director Bradley Keywell, who has disposed of 3.5 million shares so far this year, and by CEO Eric Lefkofsky, who liquidated some 2.27 million shares during the same period.
Let’s look next at the smart money activity in Groupon’s shares.