During the first half of the fourth quarter the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by about 4 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Groupon Inc (NASDAQ:GRPN) and see how the stock is affected by the recent hedge fund activity.
Groupon Inc (NASDAQ:GRPN) investors should pay attention to a decrease in hedge fund sentiment of late. GRPN was in 32 hedge funds’ portfolios at the end of the third quarter of 2018. There were 33 hedge funds in our database with GRPN positions at the end of the previous quarter. Our calculations also showed that GRPN isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most stock holders, hedge funds are seen as worthless, old financial tools of years past. While there are over 8,000 funds trading at present, We choose to focus on the elite of this group, around 700 funds. These hedge fund managers command bulk of the smart money’s total capital, and by tracking their finest investments, Insider Monkey has determined a number of investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to take a gander at the new hedge fund action regarding Groupon Inc (NASDAQ:GRPN).
Hedge fund activity in Groupon Inc (NASDAQ:GRPN)
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards GRPN over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, P2 Capital Partners held the most valuable stake in Groupon Inc (NASDAQ:GRPN), which was worth $69 million at the end of the third quarter. On the second spot was Sessa Capital which amassed $31.2 million worth of shares. Moreover, PAR Capital Management, Ulysses Management, and GLG Partners were also bullish on Groupon Inc (NASDAQ:GRPN), allocating a large percentage of their portfolios to this stock.
Due to the fact that Groupon Inc (NASDAQ:GRPN) has faced declining sentiment from the smart money, we can see that there lies a certain “tier” of fund managers that elected to cut their full holdings heading into Q3. At the top of the heap, Josh Resnick’s Jericho Capital Asset Management cut the largest stake of the 700 funds monitored by Insider Monkey, worth close to $44.6 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund dumped about $30.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q3.
Let’s go over hedge fund activity in other stocks similar to Groupon Inc (NASDAQ:GRPN). We will take a look at Tesaro Inc (NASDAQ:TSRO), Varonis Systems Inc (NASDAQ:VRNS), Covanta Holding Corporation (NYSE:CVA), and Medpace Holdings, Inc. (NASDAQ:MEDP). All of these stocks’ market caps resemble GRPN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSRO | 20 | 375053 | -4 |
| VRNS | 22 | 153158 | -4 |
| CVA | 19 | 104819 | 5 |
| MEDP | 26 | 286235 | 8 |
| Average | 21.75 | 229816 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $280 million in GRPN’s case. Medpace Holdings, Inc. (NASDAQ:MEDP) is the most popular stock in this table. On the other hand Covanta Holding Corporation (NYSE:CVA) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Groupon Inc (NASDAQ:GRPN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
