Shares of Zynga Inc. and Groupon Inc. jumped Wednesday after activist shareholder Jana Partners disclosed that it has claimed a stake in both.
THE SPARK: Jana Partners disclosed in a regulatory filing that it holds 25.5 million shares in Zynga, giving it a 4.2 percent stake in the San Francisco-based online social gaming company. The filing said Jana holds 21.9 million shares in Groupon, a stake of 3.3 percent in the Chicago-based online deal provider.
THE BIG PICTURE: Zynga and Groupon have struggled with changing business models since going public less than 2 years ago, and their stock price has suffered, making the potential for change more appealing to investors.
Jana is an activist hedge fund run by Barry Rosenstein, but it's unclear if the firm has a shake-up planned for either company. A representative for the firm declined to comment on why it invested in the companies or what its plans are.
The holdings will make Jana one of the top 10 shareholders at both Zynga and Groupon.
Jana has investments in companies including chemical maker Ashland Inc., retailer Office Depot Inc. and aerospace company Boeing Co.
SHARE ACTION: Zynga's shares increased 4 percent to $3.47 while the broader markets rose about 1 percent. Groupon's shares increased nearly 5 percent to $7.23 in afternoon trading on the news.
Zynga's share price has fallen about 60 percent since this time last year and Groupon's has dropped 41 percent.