Can the Hedge Fund Dudes Save Groupon’s Stock?
Here’s something you haven’t seen in a while — Groupon shares rose more than 36 percent last week after Chase Coleman’s Tiger Global Management disclosed Monday that it had bought 65 million shares.
The well-known hedge fund and private equity firm, which has also bought a decent-sized stake in Yahoo recently, actually purchased the stock of the much-beleaguered daily deals company on November 9, according to its filing with the Securities and Exchange Commission. At the time, Groupon was at $2.76, down about 90 percent from its IPO a year ago.
That’s nearly a 10 percent stake overall for Tiger.
It seems to be part of a hedge fund party at Groupon. Paul Tudor Jones of Tudor Investments also disclosed a small buy of 150,000 shares last week — as well another from George Soros’ Soros Fund Management, which recently disclosed it had bought 2.5 million shares of Groupon.
Groupon stock closed at $3.95 Friday, a huge improvement — though still massively off its IPO price. Its market valuation is just $2.6 billion.
The Chicago-based Groupon had to be happy about the purchase, which give the company — as well as its CEO and co-founder Andrew Mason — some much needed breathing space. One source close to the situation noted that Coleman is considered to be a friendly and well-regarded investor.
And a reassessment of Groupon by Wall Street could also help. In a note on Monday, Deutsche Bank analyst Ross Sandler wrote that he was considering an upgrade of the stock, noting that the “everything is imploding” meme around the company was not accurate.
Still, slower growth and management changes, as well as continued troubles in its European business, remain worries. Groupon recently promoted Kal Raman, who had previously been SVP of global sales and operations, to COO to help stabilize leadership.
Still, the best medicine right now seems to be a little confidence from a rich guy, as you can see from this chart:
And here’s Mason, in an video interview with me in August, talking about trying to bring back the company: