Passport Capital Gives Yelp Inc (YELP) A Positive Review

Page 1 of 2
John Burbank PASSPORT CAPITALYelp Inc (NYSE:YELP) saw San Francisco-based Passport Capital take a stake of over one million shares, or 6.3% of Yelp’s outstanding shares. Other notable hedge funds that have been upping their Yelp stake over the past few months include Joho Capital, now with 974,000 shares, and FMR, which owns 1.9 million shares (check out hedge funds loving Yelp).
After shutting down its materials fund in mid-2012 following a 31% loss, Passport Capital could use some good fortune, and it appears it is looking to the tech industry. During the third quarter, Passport is not only betting on Yelp, but also upped its stake in Google Inc (NASDAQ:GOOG) by 200% and eBay by 70% (see Passport’s top picks). Although I don’t dislike Yelp, there appears to be a number of questions surrounding the company, despite it being a ‘good house in a bad neighborhood,’ with the neighborhood being newly IPO’d companies.

Yelp’s primary business model includes a social review site covering restaurants and other businesses. The social review company is quickly becoming a top-tier search engine for finding reviews, and is taking market share from the likes of Google and Yahoo! Inc. (NASDAQ:YHOO). As far as U.S. search market share goes, Google is still the unprecedented leader, owing over 66% of the market at the end of the 2012. Yahoo! still struggles to hold its own, as Microsoft still holds the second spot with 15%, versus Yahoo!’s 12%. Google’s industry leading position bodes well for Yelp, given the social review site gets the majority of its traffic from Google.

Yelp managed to raise over $100 million in its IPO, pricing shares at $15 each. The stock has risen 40% since its March 2012 IPO, which is much better when compared to other major recent IPOs. Zynga Inc (NASDAQ:ZNGA is down 70% and Groupon Inc (NASDAQ:GRPN 80% since they started trading. The weakness in both of these newly IPO’d companies brings up questions surrounding their business models. Groupon is being hit by competition, including Amazon-backed Living Social, and Zynga is trying to tailor to a rapidly changing social gaming consumer. Zynga has been struggling to get users to fork out cash for games or game ‘perks.’ Meanwhile, the social gaming company is also struggling with continued growth, as the number of monthly active users contracted from 311 million users in the third quarter to 298 million in the fourth quarter. Daily users also decreased from from 60 million to 54 million. Groupon has been seeing fundamental issues related to sputtering growth. Last quarter the company posted revenue of $568 million, well below analysts estimates of $590, and weakness in Europe continued to plague the company.
Page 1 of 2
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

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands in the World

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!