At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Yelp Inc (NYSE:YELP) makes for a good investment right now.
Is Yelp Inc (NYSE:YELP) a safe investment right now? The smart money is turning far less bullish. The number of bullish hedge fund bets were cut by 17 in recent months. At the end of this article we will also compare YELP to other stocks including Knowles Corp (NYSE:KN), 51job, Inc. (ADR) (NASDAQ:JOBS), and National Bank of Greece (ADR) (NYSE:NBG) to get a better sense of its popularity.
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To the average investor there are a lot of gauges shareholders employ to evaluate stocks. A duo of the best gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outpace the market by a solid amount (see the details here).
With all of this in mind, let’s go over the latest action surrounding Yelp Inc (NYSE:YELP).
How have hedgies been trading Yelp Inc (NYSE:YELP)?
At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 39% tumble from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Tybourne Capital Management, managed by Eashwar Krishnan, holds the largest position in Yelp Inc (NYSE:YELP). Tybourne Capital Management has a $133.2 million position in the stock, comprising 9.4% of its 13F portfolio. The second-largest stake is held by Eminence Capital, managed by Ricky Sandler, which holds an $85.8 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Sanford J. Colen’s Apex Capital, Lee Ainslie’s Maverick Capital, and Ken Griffin’s Citadel Investment Group.
Because Yelp Inc (NYSE:YELP) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies who were dropping their full holdings heading into Q4. At the top of the heap, Eminence Capital dropped the biggest position of all the hedgies tracked by Insider Monkey, valued at about $129.1 million in call options underlying YELP shares, though as mentioned, Eminence maintains a large long position. James Dinan’s fund, York Capital Management, also said goodbye to its call options, about $112.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 17 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Yelp Inc (NYSE:YELP). These stocks are Knowles Corp (NYSE:KN), 51job, Inc. (ADR) (NASDAQ:JOBS), National Bank of Greece (ADR) (NYSE:NBG), and Beacon Roofing Supply, Inc. (NASDAQ:BECN). This group of stocks’ market valuations are similar to YELP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KN | 13 | 156457 | -3 |
| JOBS | 7 | 6807 | 0 |
| NBG | 5 | 9562 | -6 |
| BECN | 22 | 210051 | 3 |
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $516 million in YELP’s case. Beacon Roofing Supply, Inc. (NASDAQ:BECN) is the most popular stock in this table. On the other hand National Bank of Greece (ADR) (NYSE:NBG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Yelp Inc (NYSE:YELP) is more popular among hedge funds. Even though the massive decline in ownership of the stock is a big warning sign, YELP does remain far more popular and has far more capital invested in it than stocks with a similar valuation. Thus, it may still be worth considering this stock for addition to one’s portfolio.
