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Yelp Inc (YELP): Eminence Capital Discloses New Passive Stake

Eminence Capital, led by Ricky Sandler, has initiated a new position in Yelp Inc (NYSE:YELP). In a new filing with the U.S. Securities and Exchange Commission, the hedge fund disclosed owning 3.33 million Class A shares. The stake is passive by nature and represents 5.1% of the company’s outstanding common stock.

Ricky Sandler

Insider Monkey has more than 700 hedge funds in its database, including Eminence Capital. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month. These stocks were slightly riskier, so their monthly alpha amounted to 80 basis points (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed as expected, returning over 144% and beating the market by more than 84 percentage points.

New York-based hedge fund Eminence Capital was founded by Ricky Sandler in 1998. The hedge fund has around $3.6 billion assets under management (AUM). In its latest 13F, Eminence Capital reported holding positions in 60 companies. The portfolio, valued at $6.46 billion, mainly consists of consumer, information technology, and industrial stocks. The investor’s top holding, in terms of value, are represented by Fossil Group Inc (NASDAQ:FOSL), GNC Holdings Inc (NYSE:GNC), and Men’s Wearhouse Inc (NYSE:MW).

Let’s talk about Yelp Inc (NYSE:YELP), a $3.50 billion online review company, which operates a consumer-review website. For the first quarter of 2015, the company reported revenue of $118.5 million, up by 55% compared to the same quarter last year. Yelp Inc (NYSE:YELP) narrowed its net loss for the quarter to $1.3 million, or $0.02 per share, from $2.6 million, or $0.04 per share a year earlier. Yelp Inc (NYSE:YELP) expects revenue for the second quarter to be in the range of $131 million to $134 million, an increase of around 49%on the year. On a full-year basis, the revenue is expected to be in the range of $574 million to $579 million, which represents a 53% increase compared to last year.

Moreover, during the first quarter, Yelp Inc. (NYSE: YELP) acquired Eat24, a web and app-based online food ordering service based in San Bruno, California. Eat24 is currently offering online delivery and takeout services to about 20,000 restaurants in over 1,500 cities in the United States. Following the purchase, valued at $134 million, Yelp Inc. (NYSE: YELP) is planning to expand Eat24’s services to the one million U.S. restaurants listed on its website.