Fund managers leery of Groupon offer
BY DAVID ROEDER firstname.lastname@example.org April 20, 2012 7:06PM
Employees at Groupon headquarters, 600 W. Chicago Ave., are shown in a file photo. | John H. White~Sun-Times
David Roeder reports on real estate at 6:22 PM. Every Thursday on News- radio 780 and 105.9 FM WBBM. The reports are repeated at 10:22 p.m. Thursday and 7:22 a.m. Sunday
Updated: April 26, 2012 1:21PM
Groupon (GRPN) probably thought it knew everything about discounting, but the stock market has taught it more about the subject.
Shares of the Chicago-based coupon distributor are now almost half off their opening price when the company went public at $20 a share in November. Groupon closed Friday at $11.13.
If you bought the shares yourself, you only have yourself to reckon with. But what about fund managers, to whom we entrust much of our money, empowering them to find winners and losers in our names?
It turns out Groupon has few fans among the fund folks, according to Morningstar analyst Greg Carlson, who reviewed the latest quarterly portfolio stats. In a piece posted at Morningstar.com, Carlson noted that access to Groupon shares was limited because it sold a small stake in itself, but not even smaller funds have gobbled up many shares.
Carlson said no unleveraged equity fund has invested more than 2.5 percent of its assets in Groupon. The biggest buyer, he said, has been Dennis Lynch of the Morgan Stanley Institutional Mid Cap Growth fund (MPEGX), at 2.2 percent. Three other Lynch-run funds have smaller stakes, Carlson said.
He looked at the records of Will Danoff of Fidelity Contrafund (FCNTX) and Steve Wymer of Fidelity Growth Company (FDGRX) because they were eager buyers of Google (GOOG) when it was an IPO. Both took small positions in Groupon but have sold some holdings; Wymer slashed his total in half.
“Fund managers clearly don’t see Groupon as another big winner thus far,” Carlson said.
APPLE UPDATE: Apple (AAPL) has been on a real tear this year, going from $400 to nearly $650 a share. But the shares in recent days have taken a pratfall on concerns about weakness in iPad sales, dropping under $600 on Thursday. AAPL closed Friday at $572.98.
Is the sentiment about Apple reversing? People shouldn’t get carried away because the stock always has been volatile. Consider two declines last year, from $360 to the $320s and later from $420 to the $360s.
Some analysts insist that if you liked Apple near $650, you should love it now. Canaccord Genuity analysts, for example, raised their price target on the shares to $740 from $710 in the belief that second-quarter earnings will please the crowd. Apple reports earnings Tuesday.
ONCE UPON A MATTRESS: There’s a company called Mattress Firm Holding (MFRM) and it causes many puns to spring to mind, but it’s been one plush stock, going from about $25 in its late-2011 IPO to Friday’s close of $43.83.
I mention it for two reasons. One is that if you have a dream of owning a mattress retailer, this one’s for you. The other is that the company gets rave reviews from Zacks Investment Research.
Here in Chicago, we might not know the Mattress Firm chain because its stores don’t get much closer than Lake Geneva. But Zacks said same-store sales were up 24.8 percent in the fourth quarter and it plans to add 100 locations per year to its 800-store count in the United States.
CLOSING QUOTE: “Astronomical CEO pay is based on the false idea that the success of a corporation is due to one CEO genius. In reality, all employees create value, and CEO pay levels should be more in line with the rest of the company’s pay structure. CEOs should be paid as a member of a team, not as a superstar.” — Richard Trumka, president, AFL-CIO, releasing a report showing that the average CEO of an S&P 500 company earns 380 times what a regular worker makes. In 1980, the ratio was 42 to 1.