Smart Money Is Losing Confidence In LinkedIn Corp (LNKD)

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards LinkedIn Corp (NYSE:LNKD).

Is LinkedIn Corp (NYSE:LNKD) the right investment to pursue these days? The smart money is taking a pessimistic view. The number of long hedge fund positions fell by 4 recently. LinkedIn Corp (NYSE:LNKD) was in 38 hedge funds’ portfolios at the end of the third quarter of 2015. There were 42 hedge funds in our database with LinkedIn Corp (NYSE:LNKD) holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Intuit Inc. (NASDAQ:INTU), Constellation Brands, Inc. (NYSE:STZ), and ICICI Bank Limited (ADR) (NYSE:IBN) to gather more data points.

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Today, there is a multitude of indicators that stock traders have at their disposal to evaluate their holdings. Two of the most under-the-radar indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can trounce their index-focused peers by a healthy margin (see the details here).

Now, let’s analyze the new action encompassing LinkedIn Corp (NYSE:LNKD).

What does the smart money think about LinkedIn Corp (NYSE:LNKD)?

Heading into Q4, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 10% from the second quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Christopher Lord’s Criterion Capital has the largest position in LinkedIn Corp (NYSE:LNKD), worth close to $168.7 million, comprising 5.7% of its total 13F portfolio. Sitting at the No. 2 spot is Generation Investment Management, managed by David Blood and Al Gore, which holds a $158 million position; 2.3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish encompass John Griffin’s Blue Ridge Capital, Eric Bannasch’s Cadian Capital, and Ricky Sandler’s Eminence Capital.

Since LinkedIn Corp (NYSE:LNKD) has faced a declination in interest from the smart money, it’s safe to say that there lies a certain “tier” of fund managers that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, Mike Masters’ Masters Capital Management cut the biggest stake of all the hedgies watched by Insider Monkey, worth an estimated $20.7 million in stock. Doug Gordon, Jon Hilsabeck and Don Jabro’s fund, Shellback Capital, also dropped its stock, about $14.5 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds by the end of the third quarter.

Let’s now review the hedge fund activity in other stocks similar to LinkedIn Corp (NYSE:LNKD). We will take a look at Intuit Inc. (NASDAQ:INTU), Constellation Brands, Inc. (NYSE:STZ), ICICI Bank Limited (ADR) (NYSE:IBN), and Deere & Company (NYSE:DE). All of these stocks’ market caps are closest to LinkedIn Corp (NYSE:LNKD)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INTU 32 611479 -11
STZ 64 4868413 2
IBN 34 439241 5
DE 35 2636569 4

As you can see, these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $2.14 billion. That figure was $1.77 billion in LinkedIn Corp (NYSE:LNKD)’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand, Intuit Inc. (NASDAQ:INTU) is the least popular one with only 32 bullish hedge fund positions. LinkedIn Corp (NYSE:LNKD) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Constellation Brands, Inc. (NYSE:STZ) might be a better candidate to consider a long position.