Hedge Funds Are Crazy About Yelp Inc (YELP)

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Should Yelp Inc (NYSE:YELP) investors track the following data?

If you were to ask many traders, hedge funds are assumed to be bloated, old investment tools of a period lost to current times. Although there are In excess of 8,000 hedge funds in operation currently, this site looks at the masters of this group, about 525 funds. It is widely held that this group controls the lion’s share of all hedge funds’ total capital, and by paying attention to their highest quality investments, we’ve uncovered a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as necessary, bullish insider trading activity is another way to analyze the investments you’re interested in. Just as you’d expect, there are a variety of motivations for an insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this tactic if you understand what to do (learn more here).

Keeping this in mind, it’s important to discuss the recent info about Yelp Inc (NYSE:YELP).

How have hedgies been trading Yelp Inc (NYSE:YELP)?

At Q2’s end, a total of 27 of the hedge funds we track held long positions in this stock, a change of 17% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes substantially.

Yelp Inc (NYSE:YELP)According to our 13F database, John Burbank’s Passport Capital had the largest position in Yelp Inc (NYSE:YELP), worth close to $77.6 million, comprising 2.6% of its total 13F portfolio. On Passport Capital’s heels is Joho Capital, managed by Robert Karr, which held a $66.9 million position; the fund has 5.7% of its 13F portfolio invested in the stock. Other peers with similar optimism include Robert Pitts’s Steadfast Capital Management, George Soros’s Soros Fund Management and John Thaler’s JAT Capital Management.

Now, particular hedge funds were leading the bulls’ herd. Passport Capital, managed by John Burbank, established the most outsized position in Yelp Inc (NYSE:YELP). Passport Capital had 77.6 million invested in the company at the end of the quarter. Robert Karr’s Joho Capital also made a $66.9 million investment in the stock during the quarter. The other funds with brand new YELP positions are Robert Pitts’s Steadfast Capital Management, George Soros’s Soros Fund Management, and John Thaler’s JAT Capital Management.

Insider trading activity in Yelp Inc (NYSE:YELP)

Bullish insider trading is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest six-month time frame, Yelp Inc (NYSE:YELP) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Yelp Inc (NYSE:YELP). These stocks are Sohu.com Inc (NASDAQ:SOHU), InterXion Holding NV (NYSE:INXN), Shutterfly, Inc. (NASDAQ:SFLY), OpenTable Inc (NASDAQ:OPEN), and Kayak Software Corp (NASDAQ:KYAK). This group of stocks belong to the internet information providers industry and their market caps match YELP’s market cap.

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