Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Smart Money Ownership Of Groupon Inc (GRPN) Takes A Dive In Q3

There are several ways to beat the market, and investing in small-cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small-cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small-cap picks. In this article, we use this hedge fund filing data to analyze Groupon Inc (NASDAQ:GRPN).

Is Groupon Inc undervalued? The best stock pickers are getting less optimistic. The number of bullish hedge fund bets shrunk by 8 in recent months. At the end of this article we will also compare Groupon Inc to other stocks including J&J Snack Foods Corp. (NASDAQ:JJSF), NRG Yield, Inc. Class C (NYSE:NYLD), and Esterline Technologies Corporation (NYSE:ESL) to get a better sense of its popularity.

Follow Groupon Inc. (NASDAQ:GRPN)
Trade (NASDAQ:GRPN) Now!

At the moment there are a multitude of indicators market participants put to use to evaluate stocks. A duo of the less known indicators are hedge fund and insider trading indicators. our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass their index-focused peers by a superb margin (see the details here).

Now, let’s take a look at the latest action regarding Groupon Inc (NASDAQ:GRPN).

How are hedge funds trading Groupon Inc (NASDAQ:GRPN)?

Heading into Q4, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 24% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in Groupon Inc (NASDAQ:GRPN), worth close to $35.1 million, comprising 0.1% of its total 13F portfolio. The second-largest stake is held by Cliff Asness of AQR Capital Management, with a $26.3 million position; 0.1% of his firm’s 13F portfolio is allocated to the stock. Other peers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and George McCabe’s Portolan Capital Management.

Due to the fact that Groupon Inc (NASDAQ:GRPN) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers that elected to cut their positions entirely heading into Q4. At the top of the heap, Leon Cooperman’s Omega Advisors said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, worth about $30.6 million in call options underlying Groupon shares. Michael Platt and William Reeves of BlueCrest Capital Mgmt. was right behind that move, as the fund cut about $6 million worth of shares. These transactions are intriguing to say the least, as total hedge fund interest fell by 8 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Groupon Inc (NASDAQ:GRPN). We will take a look at J&J Snack Foods Corp. (NASDAQ:JJSF), NRG Yield, Inc. Class C (NYSE:NYLD), Esterline Technologies Corporation (NYSE:ESL), and Parsley Energy Inc (NYSE:PE). This group of stocks’ market caps match GRPN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JJSF 9 63918 2
NYLD 31 277988 -2
ESL 21 443595 -1
PE 21 422994 -4

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $302 million. That figure was $136 million in Groupon Inc’s case. NRG Yield, Inc. Class C (NYSE:NYLD) is the most popular stock in this table. On the other hand J&J Snack Foods Corp. (NASDAQ:JJSF) is the least popular one with only 9 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. This is a slightly positive signal but given that ownership is falling fast and the amount of capital invested in the stock is low, it may not be worth considering Groupon for your portfolio at this time.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.