Global

Analyzing the Insider Data for Groupon, Inc. (GRPN)

Recent insider trends for Groupon, Inc. (NASDAQ:GRPN) have caught the attention of investors. Insider activity is often a strong indicator of future performance in a stock, and if the data on GRPN is anything to go by, investors should pay attention.

Institutions own 56.14% of Groupon, Inc. (GRPN)’s shares. The total value of these holdings, in millions, is $1,683. Among active positions in the latest quarter, 80 holders increased their positions by a total of 41.35 million shares, 109 holders decreased the positions by a total of 47.81 million shares, and 36 holders held their positions. This works out to a net decrease in ownership of 6.46 million shares, and suggests that institutions are feeling bearish about the stock.

Among new and sold out positions, 38 holders initiated new positions by a total of 18.31 million shares and 42 holders exited their positions by a total of 18.24 million shares. This nets out to an increase of 72309 shares and is a bullish sign for GRPN.

In the last three months, insiders executed a total of 15 trades. 1 of these were buys and 14 were sells. Insider ownership decreased by a total of 1.48 million shares, which suggests that GRPN’s key executives are feeling less optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 18 buys and 61 sells, and ownership decreased by a net of 26.75 million shares.



The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the number of a stock’s shares currently being shorted, captures what the market as a whole feels about a stock. Groupon, Inc. (NASDAQ:GRPN)’s short interest is 35.53 million shares, or 8.98% of the float. This represents an increase of 2% in the number of shares being shorted compared to the previous reading, and implies that investors felt more pessimistic about the stock during the past two weeks.

Supplementing insider data with technical indicators can help an investor form a more complete view on the outlook for a stock. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that GRPN is a Strong buy, which implies that GRPN is expected to outperform the market based on prior trading patterns.

Conclusion




Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bearish. Technical indicators (also) suggest that Groupon, Inc. (NASDAQ:GRPN) is undervalued.

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