If you’d ask most market participants, hedge funds are perceived as underperforming, outdated financial tools of years past. While there are more than 8000 funds trading at the moment, we at Insider Monkey look at the upper echelon of this club, close to 450 funds. It is estimated that this group has its hands on the majority of the smart money’s total asset base, and by tracking their top investments, we have unsheathed a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as key, optimistic insider trading activity is another way to parse down the investments you’re interested in. Obviously, there are a variety of stimuli for a corporate insider to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this tactic if investors know what to do (learn more here).
Keeping this in mind, it’s important to take a look at the key action regarding Groupon Inc (NASDAQ:GRPN).
How have hedgies been trading Groupon Inc (NASDAQ:GRPN)?
In preparation for this quarter, a total of 25 of the hedge funds we track held long positions in this stock, a change of 19% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.
According to our comprehensive database, Chase Coleman and Feroz Dewan’s Tiger Global Management LLC had the most valuable position in Groupon Inc (NASDAQ:GRPN), worth close to $397.8 million, accounting for 6.2% of its total 13F portfolio. Coming in second is Barry Rosenstein of JANA Partners, with a $134.3 million position; 2.8% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include John Lykouretzos’s Hoplite Capital Management, Bill Miller’s Legg Mason Capital Management and Pasco Alfaro / Richard Tumure’s Miura Global Management.
As industrywide interest jumped, key money managers were breaking ground themselves. JANA Partners, managed by Barry Rosenstein, initiated the biggest position in Groupon Inc (NASDAQ:GRPN). JANA Partners had 134.3 million invested in the company at the end of the quarter. John Lykouretzos’s Hoplite Capital Management also initiated a $71.6 million position during the quarter. The other funds with brand new GRPN positions are Jim Simons’s Renaissance Technologies, Jeffrey Jon Berney’s TriOaks Capital Management, and Steven Cohen’s SAC Capital Advisors.
How have insiders been trading Groupon Inc (NASDAQ:GRPN)?
Insider buying is best served when the company in question has seen transactions within the past six months. Over the latest six-month time frame, Groupon Inc (NASDAQ:GRPN) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Groupon Inc (NASDAQ:GRPN). These stocks are Zynga Inc (NASDAQ:ZNGA), HomeAway, Inc. (NASDAQ:AWAY), Youku Tudou Inc (ADR) (NYSE:YOKU), AOL, Inc. (NYSE:AOL), and IAC/InterActiveCorp (NASDAQ:IACI). All of these stocks are in the internet information providers industry and their market caps are similar to GRPN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Zynga Inc (NASDAQ:ZNGA) | 27 | 0 | 9 |
| HomeAway, Inc. (NASDAQ:AWAY) | 21 | 0 | 12 |
| Youku Tudou Inc (ADR) (NYSE:YOKU) | 17 | 0 | 0 |
| AOL, Inc. (NYSE:AOL) | 22 | 0 | 5 |
| IAC/InterActiveCorp (NASDAQ:IACI) | 30 | 0 | 3 |
With the returns demonstrated by our tactics, retail investors should always pay attention to hedge fund and insider trading activity, and Groupon Inc (NASDAQ:GRPN) applies perfectly to this mantra.
