Hedge fund Tiger Global discloses big Groupon stake

Mon Nov 19, 2012 11:32pm GMT

People enter and leave Groupon Inc corporate office and headquarters in Chicago, Illinois, November 4, 2011. REUTERS/Frank Polich

People enter and leave Groupon Inc corporate office and headquarters in Chicago, Illinois, November 4, 2011.

Credit: Reuters/Frank Polich

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(Reuters) - Tiger Global Management, a technology focused hedge fund run by Chase Coleman and Feroz Dewan, disclosed a big stake in Groupon Inc on Monday, a vote of confidence for the struggling daily deal website.

Tiger Global, which oversees about $8 billion in assets, owns 65 million Class A shares in Groupon, representing 9.9 percent of total Class A shares outstanding, according to a Securities and Exchange Commission filing late Monday.

The purchases were made on November 9, the filing said. That was the day after Groupon reported disappointing third-quarter results when the stock slumped. Groupon shares hit a record low of $2.60 on November 12.

Groupon shares rose 4.2 percent to $3.105 on Monday. In after-hours trading, the shares climbed more than 4 percent to $3.24. Tiger Global disclosed its stake after stock markets closed on Monday.

Groupon lost more than three quarters of its value since the company's initial public offering about a year ago as slowing growth led many on Wall Street to question its business model.

Backing from Tiger Global suggests all may not be lost for the company.

Coleman used to be a tech analyst at Julian Robertson's Tiger Management, one of the most successful hedge-fund firms. Coleman launched Tiger Global in 2001 with backing from Robertson.

Tiger Global has invested in several Internet companies in the past, including Facebook Inc and LinkedIn Corp.

The firm sometimes makes these investments through its hedge fund, but it also has venture capital funds that buy stakes in early-stage private companies. In 2011, the firm invested in Peixe Urbano, a start-up that competes against Groupon in South America.

Deutsche Bank analyst Ross Sandler said on Monday that he recently met with Groupon management and came away feeling a bit more positive.

The company may enter a "sweet spot" between a "value trap" and a "things are getting less worse" story, Sandler wrote in a note to investors.

(Reporting By Alistair Barr; Editing by Bernard Orr)

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