Tiger Cub Robert Karr Added To Joho Capital’s Yelp Position

Page 1 of 2

Joho Capital, a hedge fund managed by Tiger Cub Robert Karr which tends to be overweight technology stocks, has reported a position of almost 1 million shares in Yelp Inc (NYSE:YELP), giving it 5.7% of the total shares outstanding. We had reported in December that Joho owned close to 900,000 shares of the local business reviews company (read our analysis of Yelp from December); the fund did not have a position at the end of the third quarter, according to its 13F filing (see more of Karr’s stock picks).

Yelp Inc (NYSE:YELP)

Yelp Inc still had negative operating income in the third quarter of 2012, and in fact in the first nine months of the year its operating losses were higher than in the same period in 2011 despite a 65% increase in revenue. This is because marketing, product development, and SGA costs have swelled. Wall Street analysts are predicting only 2 cents per share of earnings in 2013; consensus for 2012 is that Yelp lost 31 cents per share. That certainly isn’t positive for the company’s value prospects and we’d struggle to recommend it as a buy until it demonstrated sustained profitability.

Yelp’s stock price dropped 6% on January 15th on high volume after Facebook Inc (NASDAQ:FB)’s mystery announcement turned out to be a “Social Graph.” The markets believed that this feature, by serving Facebook users their friends’ recommendations for local businesses, would outcompete Yelp’s offering. Facebook’s market penetration is enormous, and while Yelp certainly has more people reviewing businesses- theoretically making the consensus opinion more accurate- they are overwhelmingly strangers to most consumers and people may prefer to trust the views of their friends (or, we should say, their Facebook friends).

Daniel Benton’s Andor Capital Management and Robert Pitts’ Steadfast Capital Management each owned about half a million shares of Yelp Inc at the end of September (check out Steadfast’s favorite stocks). Three insiders have sold their shares of Yelp since the beginning of 2013 (see a history of insider sales at Yelp). We don’t usually put much weight on insider selling, as the principles of diversification make it rational for insiders to reduce their exposure to the stock price of the company they work for, but it is something to be aware of. Another point is that over 60% of the outstanding shares of Yelp were held short as of the most recent data- truly an enormous figure. The cost to borrow may be too high for investors to profitably short the stock even if it declines significantly.

Most of Yelp’s peers look potentially overvalued as well:

Page 1 of 2
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

Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

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!