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.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!