According to a 13G filed with the SEC, billionaire Steve Cohen’s SAC Capital Advisors owns 1.1 million shares of OpenTable Inc (NASDAQ:OPEN), giving the hedge fund 5% of the total shares outstanding. SAC had previously crossed the 5% threshold last fall, before selling some shares during Q4 and ending 2012 with about 940,000 shares in its portfolio according to its 13F filing (see more stocks SAC owned).
OpenTable Inc (NASDAQ:OPEN) is still a growth company by any measurement, but its growth rates have been slowing as the restaurant reservations service has already achieved considerable market penetration. Revenue was up by 16% last year compared to 2011, and with margins shrinking earnings only grew 11%. These numbers aren’t necessarily bad on their own- the issue is that OpenTable Inc (NASDAQ:OPEN)’s current valuation is quite high (the trailing earnings multiple is 54) and so the company needs to deliver high growth for several years in order to justify the current valuation.
Wall Street analysts expect earnings to speed up over the next couple of years. Forecasts for this year are for $1.91 in earnings per share (which would be a 13% increase from 2012) and consensus for 2014 is $2.27. This places OpenTable’s $1.3 billion market capitalization at 24 times forward earnings estimates, and so the business would have to sustain double-digit growth rates on the bottom line for a few years beyond that point in order to be a good value at this price. A number of market players find OpenTable Inc (NASDAQ:OPEN) overvalued at present, with the most recent data showing 24% of the float held short. It is possible that the company would be a potential acquisition for cash-rich Google Inc (NASDAQ:GOOG) or for Yahoo! Inc. (NASDAQ:YHOO), which has reportedly been looking at making some acquisitions as part of re-orienting its business. This makes shorting the stock somewhat risky, but there haven’t been any indications that an OpenTable Inc (NASDAQ:OPEN) acquisition is being considered there and we are skeptical that even strategics would like the company at its current valuation.
We track quarterly 13F filings from hedge funds and other notable investors as part of our work developing investing strategies (for example, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year). This database can also be used to find other managers who liked OpenTable Inc (NASDAQ:OPEN) as of their most recent filings from the beginning of this year. We see Chris Hansen’s Valiant Capital with 1.1 million shares at that time, unchanged from the end of September (find Hansen’s favorite stocks) while Cantillon Capital Management initiated a position of 1.1 million shares during the fourth quarter of 2012 (check out Cantillon’s stock picks).