The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Groupon Inc (NASDAQ:GRPN).
Is Groupon Inc (NASDAQ:GRPN) a first-rate investment today? Money managers were getting less optimistic. The number of long hedge fund bets were trimmed by 1 lately. Groupon Inc (NASDAQ:GRPN) was in 25 hedge funds’ portfolios at the end of March. The all time high for this statistic is 33. Our calculations also showed that GRPN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Reeder of PAR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the key hedge fund action surrounding Groupon Inc (NASDAQ:GRPN).
Do Hedge Funds Think GRPN Is A Good Stock To Buy Now?
At the end of March, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the fourth quarter of 2020. By comparison, 18 hedge funds held shares or bullish call options in GRPN a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, MIG Capital held the most valuable stake in Groupon Inc (NASDAQ:GRPN), which was worth $68.5 million at the end of the fourth quarter. On the second spot was PAR Capital Management which amassed $63.4 million worth of shares. D E Shaw, Renaissance Technologies, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Prentice Capital Management allocated the biggest weight to Groupon Inc (NASDAQ:GRPN), around 8.72% of its 13F portfolio. MIG Capital is also relatively very bullish on the stock, earmarking 6.75 percent of its 13F equity portfolio to GRPN.
Seeing as Groupon Inc (NASDAQ:GRPN) has experienced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedgies that elected to cut their full holdings heading into Q2. Interestingly, Zachary Miller’s Parian Global Management dropped the biggest position of the 750 funds followed by Insider Monkey, totaling an estimated $16.7 million in stock, and Leonard Green’s Leonard Green & Partners was right behind this move, as the fund dumped about $3.8 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Groupon Inc (NASDAQ:GRPN) but similarly valued. We will take a look at CSG Systems International, Inc. (NASDAQ:CSGS), Studio City International Holdings Limited (NYSE:MSC), DermTech, Inc. (NASDAQ:DMTK), Meta Financial Group Inc. (NASDAQ:CASH), G-III Apparel Group, Ltd. (NASDAQ:GIII), Zymeworks Inc. (NYSE:ZYME), and Star Bulk Carriers Corp. (NASDAQ:SBLK). This group of stocks’ market caps are similar to GRPN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSGS | 23 | 141997 | 1 |
| MSC | 3 | 226997 | 0 |
| DMTK | 18 | 303148 | 4 |
| CASH | 14 | 109318 | 5 |
| GIII | 14 | 90292 | -2 |
| ZYME | 27 | 473839 | -1 |
| SBLK | 13 | 692200 | 3 |
| Average | 16 | 291113 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $376 million in GRPN’s case. Zymeworks Inc. (NYSE:ZYME) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 3 bullish hedge fund positions. Groupon Inc (NASDAQ:GRPN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GRPN is 72.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately GRPN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GRPN were disappointed as the stock returned -19.8% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Groupon Inc. (NASDAQ:GRPN)
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Disclosure: None. This article was originally published at Insider Monkey.
