Here’s Why Chase Coleman and His Team Love LinkedIn Corporation (LNKD)

Chase ColemanLinkedIn Corporation (NYSE:LNKD), the online professional networking platform of more than 175 million users, looks to change how unemployed workers find jobs, while improving the way enterprises fill open positions. Since the company’s 2009 IPO, LinkedIn has more than quadrupled its revenues, with a major push coming from its hiring solutions segment, which accounted for 53% of revenue in the second quarter of this year.

Instead of letting off the gas that’s driving growth, LinkedIn Corporation (NYSE:LNKD) plans to continue to expand its services internationally, while improving its core services that engage existing customers. LinkedIn can already be viewed in 17 languages, but the company looks to capitalize on its opportunities in the Asian Pacific and Brazil regions. The company also hopes to close the gap between the percentage of revenue it derives from outside of the U.S., and those it receives from American users. Currently, 36% of the network’s top line is a result of its businesses abroad.

One of LinkedIn’s biggest advantages over its competitors is in its breadth of functions that are present on the online platform. Unlike Monster Worldwide, Inc (NYSE:MWW), subscribing entities can do much more than just post job listings, as LinkedIn instantly recommends 10 professionals for any open position, in addition to sporting a simpler, easier to use search engine. Likewise, the site allows recruiters to customize their searches in nearly every way imaginable when searching for candidates.

Job-seekers, on the other hand, often use their LinkedIn accounts to get their foot in the door of a company, regardless of if there are any open positions or not. The network’s innovative “six degrees of separation” system is a self-marketing tool if used correctly, though users must be careful not abuse the ability to connect with the millions of connections that are available at their fingertips. While the larger social networking site Facebook Inc. (NASDAQ:FB) seems to motivate users to be concerned about the quantity of their friend-base, LinkedIn requires that users consider the quality of their connections.

From a valuation standpoint, shares of LinkedIn are not cheap, as they sport a forward earnings multiple of 108.8, which is much higher than Mark Zuckerberg’s company (32.2). When growth is factored into the equation, we can see that LinkedIn sports a PEG ratio of 3.3; typically any figure above 2.0 signals overvaluation. Now, the Street is expecting the company to reach earnings of 51 cents a share by the end of 2013, a vast improvement from 2011′s year-end EPS of 13 cents a share. This two-year expected EPS growth of 292.3% is quite impressive, which may push some investors into a “growth at any price” strategy.

Looking at the hedge fund industry, we can see that Chase Coleman‘s hedge fund, Tiger Global Management, is the largest holder of LinkedIn stock.  Between the first and second quarters of 2012, Tiger Global purchased 3 million shares of LinkedIn.  The stock now comprises 5.9% of its 13F portfolio and its ninth largest holding. Conversely, insiders at the online professional networking service have been selling their shares. Between September 4 and September 6 insiders sold over 150,000 shares of the company. The stock currently trade at $117.90, just shy of its 52-week high of $122.85, so profit-taking is the likely explanation behind these transactions.

As is evident by its astronomical earnings valuation, investors believe that LinkedIn has the qualities of a market-shifting company, with a sound structure in place that will enable it to sustain its high rate of growth. In comparison to Facebook, the company may in fact be the more powerful social network, as it truly is reshaping the job hiring process as a whole. Although its stock may seem too expensive right now, hedge funds like Chase Coleman’s Tiger Global believe LinkedIn can achieve future growth from the value that it creates with these services.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!