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

The 10 Biggest Airports in the World

The 5 Most Gang Infested Cities In America

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

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

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!