The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Groupon Inc (NASDAQ:GRPN) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Groupon Inc (NASDAQ:GRPN) has seen an increase in hedge fund interest in recent months. Groupon Inc (NASDAQ:GRPN) was in 19 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 33. There were 18 hedge funds in our database with GRPN holdings at the end of March. Our calculations also showed that GRPN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind let’s take a peek at the new hedge fund action regarding Groupon Inc (NASDAQ:GRPN).
How have hedgies been trading Groupon Inc (NASDAQ:GRPN)?
Heading into the third quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in GRPN over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Groupon Inc (NASDAQ:GRPN) was held by MIG Capital, which reported holding $28.9 million worth of stock at the end of September. It was followed by PAR Capital Management with a $17 million position. Other investors bullish on the company included Renaissance Technologies, ExodusPoint Capital, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position MIG Capital allocated the biggest weight to Groupon Inc (NASDAQ:GRPN), around 2.98% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, dishing out 0.65 percent of its 13F equity portfolio to GRPN.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Renaissance Technologies, established the biggest position in Groupon Inc (NASDAQ:GRPN). Renaissance Technologies had $6.1 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $3.1 million position during the quarter. The other funds with brand new GRPN positions are Paul Tudor Jones’s Tudor Investment Corp and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now review hedge fund activity in other stocks similar to Groupon Inc (NASDAQ:GRPN). These stocks are ProPetro Holding Corp. (NYSE:PUMP), El Pollo LoCo Holdings Inc (NASDAQ:LOCO), Allegiance Bancshares, Inc. (NASDAQ:ABTX), Camden National Corporation (NASDAQ:CAC), Origin Bancorp, Inc. (NASDAQ:OBNK), Tredegar Corporation (NYSE:TG), and Ellington Financial Inc. (NYSE:EFC). This group of stocks’ market valuations are closest to GRPN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PUMP | 18 | 52445 | 5 |
| LOCO | 10 | 20267 | 1 |
| ABTX | 5 | 5302 | -1 |
| CAC | 12 | 45871 | 2 |
| OBNK | 6 | 12081 | 1 |
| TG | 11 | 56654 | 1 |
| EFC | 8 | 42376 | -3 |
| Average | 10 | 33571 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $70 million in GRPN’s case. ProPetro Holding Corp. (NYSE:PUMP) is the most popular stock in this table. On the other hand Allegiance Bancshares, Inc. (NASDAQ:ABTX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Groupon Inc (NASDAQ:GRPN) is more popular among hedge funds. Our overall hedge fund sentiment score for GRPN is 73.3. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 24.8% in 2020 through the end of September but still managed to beat the market by 19.3 percentage points. Hedge funds were also right about betting on GRPN as the stock returned 12.6% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
