Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is LinkedIn Corp (NYSE:LNKD) a buy here? The smart money is reducing their bets on the stock. The number of bullish hedge fund positions declined by seven during the last quarter. At the end of this article we will also compare LNKD to other stocks including Archer Daniels Midland Company (NYSE:ADM), Equity Residential (NYSE:EQR), and Norfolk Southern Corp. (NYSE:NSC) to get a better sense of its popularity.
Follow Linkedin Corp (NYSE:LNKD)
Follow Linkedin Corp (NYSE:LNKD)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to analyze the new action encompassing LinkedIn Corp (NYSE:LNKD).
What does the smart money think about LinkedIn Corp (NYSE:LNKD)?
As stated earlier, during the third quarter, the number of funds tracked by Insider Monkey long LinkedIn Corp declined by seven and 59 investors reported holding shares as of the end of September. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Pentwater Capital Management, led by Matthew Halbower, holds the most valuable position in LinkedIn Corp (NYSE:LNKD). Pentwater Capital Management has a $693.4 million position in the stock, comprising 6.4% of its 13F portfolio. Sitting at the No. 2 spot is Karthik Sarma’s SRS Investment Management, which holds a $509.4 million position; the fund has 13.5% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Thomas Steyer’s Farallon Capital, Nick Niell’s Arrowgrass Capital Partners, and David E. Shaw’s D E Shaw.
Seeing as LinkedIn Corp (NYSE:LNKD) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers who sold off their positions entirely by the end of the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest position of the 700 funds monitored by Insider Monkey, worth close to $81.7 million in call options. Jacob Gottlieb’s fund, Visium Asset Management, also cut its call options, about $79.7 million worth.
Let’s go over hedge fund activity in other stocks similar to LinkedIn Corp (NYSE:LNKD). We will take a look at Archer Daniels Midland Company (NYSE:ADM), Equity Residential (NYSE:EQR), Norfolk Southern Corp. (NYSE:NSC), and Intuitive Surgical, Inc. (NASDAQ:ISRG). All of these stocks’ market caps are closest to LNKD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADM | 24 | 676010 | -2 |
| EQR | 20 | 794112 | -5 |
| NSC | 36 | 758740 | 4 |
| ISRG | 33 | 1266473 | 2 |
As you can see these stocks had an average of 28 funds with long positions at the end of September and the average amount invested in these stocks was $874 million. That figure was $4.84 billion in LNKD’s case. Norfolk Southern Corp. (NYSE:NSC) is the most popular stock in this table, while Equity Residential (NYSE:EQR) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks LinkedIn Corp (NYSE:LNKD) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
