Yelp Inc (NYSE:YELP) investors should be aware of a decrease in hedge fund sentiment recently.
According to most shareholders, hedge funds are perceived as worthless, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open today, we at Insider Monkey hone in on the masters of this group, around 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total capital, and by paying attention to their highest performing equity investments, we have figured out a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as beneficial, optimistic insider trading activity is another way to parse down the investments you’re interested in. Just as you’d expect, there are a number of motivations for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this strategy if piggybackers understand what to do (learn more here).
Consequently, we’re going to take a glance at the latest action encompassing Yelp Inc (NYSE:YELP).
What have hedge funds been doing with Yelp Inc (NYSE:YELP)?
Heading into 2013, a total of 9 of the hedge funds we track held long positions in this stock, a change of -31% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.
According to our comprehensive database, Robert Karr’s Joho Capital had the biggest position in Yelp Inc (NYSE:YELP), worth close to $18 million, accounting for 2.4% of its total 13F portfolio. Sitting at the No. 2 spot is Coatue Management, managed by Philippe Laffont, which held a $14 million position; 2.4% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Drew Cupps’s Cupps Capital Management, Robert Pitts’s Steadfast Capital Management and Scott Fine and Peter Richards’s Empire Capital Management.
Since Yelp Inc (NYSE:YELP) has witnessed a declination in interest from hedge fund managers, we can see that there lies a certain “tier” of hedge funds that decided to sell off their full holdings in Q4. Intriguingly, Daniel Benton’s Andor Capital Management dumped the largest position of the “upper crust” of funds we watch, worth about $14 million in stock., and SAC Subsidiary of CR Intrinsic Investors was right behind this move, as the fund dumped about $4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds in Q4.
What have insiders been doing with Yelp Inc (NYSE:YELP)?
Insider trading activity, especially when it’s bullish, is most useful when the company in question has seen transactions within the past half-year. Over the latest six-month time frame, Yelp Inc (NYSE:YELP) has seen zero unique insiders buying, and 15 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity 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 are similar to YELP’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Sohu.com Inc (NASDAQ:SOHU)||15||0||1|
|InterXion Holding NV (NYSE:INXN)||19||0||0|
|Shutterfly, Inc. (NASDAQ:SFLY)||14||0||9|
|OpenTable Inc (NASDAQ:OPEN)||17||0||4|
|Kayak Software Corp (NASDAQ:KYAK)||8||0||0|
With the returns demonstrated by Insider Monkey’s strategies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Yelp Inc (NYSE:YELP) applies perfectly to this mantra.