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One way to get ahead of the Groupon IPO is to buy some shares in
GSV Capital(GSVC - Get Report), an externally managed, non-diversified closed-end management investment company. This stock could be a great buying opportunity in front of the Groupon IPO, with shares off by 5% so far in 2011.
GSV Capital is the first publically traded security that enables investors to participate in the growth of the world's most exciting and growing companies -- before they go public. GSV's current investments include
Bloomenergy and, of course, Groupon. Twitter is its largest holding, Facebook is its second-largest holding, and Groupon is its eighth-largest holding.
GSV Capital could be a viewed as a lower-risk way to play the Groupon IPO since the company is so diversified in its investments, with multiple startups. That said, with Groupon being its eighth-largest holding, a strong IPO from the daily deals player could easily spark a big spike for GSV Capital.
The way I would play GSV Capital ahead of the Groupon IPO would be to simply buy the stock if it breaks out above some overhead resistance at its 50-day
moving average of $14.42 to $15 a share on
solid volume. Look for any up-volume days that are tracking in close to or above the three-month average volume of 91,600 shares. If that breakout triggers and it comes with volume, I would target a run back toward $17 a share or possibly even higher.
>>5 Stocks Setting Up to Break Out
Keep a tight mental stop on this play since we are looking for just a quick trade if market players pile into this name ahead of the Groupon IPO. Another way to play GSV would be to buy it near some previous support at $13 to $12.72 a share with a mental stop just a few percentage points below those levels. This way you can buy on weakness and anticipate the breakout if it does trigger once Groupon goes public.