This Metric Says You Are Smart to Sell LinkedIn Corp (LNKD)

LinkedIn Corp (NYSE:LNKD) has seen a decrease in enthusiasm from smart money recently.

According to most traders, hedge funds are seen as unimportant, old investment tools of years past. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey look at the crème de la crème of this group, close to 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total asset base, and by keeping an eye on their best stock picks, we have revealed a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as integral, bullish insider trading sentiment is another way to break down the marketplace. There are a number of reasons for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this strategy if “monkeys” understand where to look (learn more here).

Now, let’s take a glance at the key action regarding LinkedIn Corp (NYSE:LNKD).

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

At Q1’s end, a total of 40 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully.

When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in LinkedIn Corp (NYSE:LNKD), worth close to $176.6 million, accounting for 0.4% of its total 13F portfolio. On Renaissance Technologies’s heels is Columbus Circle Investors, managed by Donald Chiboucis, which held a $155.1 million position; 1.2% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include John Thaler’s JAT Capital Management, Philippe Laffont’s Coatue Management and Paul Ruddock and Steve Heinz’s Lansdowne Partners.

Due to the fact that LinkedIn Corp (NYSE:LNKD) has faced declining sentiment from the smart money, it’s easy to see that there was a specific group of hedgies that elected to cut their full holdings last quarter. Intriguingly, Michael Karsch’s Karsch Capital Management said goodbye to the biggest position of all the hedgies we track, totaling close to $21.2 million in stock.. Scott Fine and Peter Richards’s fund, Empire Capital Management, also cut its stock, about $10.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in LinkedIn Corp (NYSE:LNKD)

Insider buying is particularly usable when the company in question has experienced transactions within the past six months. Over the last six-month time frame, LinkedIn Corp (NYSE:LNKD) has experienced zero unique insiders buying, and 13 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to LinkedIn Corp (NYSE:LNKD). These stocks are Akamai Technologies, Inc. (NASDAQ:AKAM), Tripadvisor Inc (NASDAQ:TRIP), Yandex NV (NASDAQ:YNDX), Baidu.com, Inc. (ADR) (NASDAQ:BIDU), and Yahoo! Inc. (NASDAQ:YHOO). This group of stocks belong to the internet information providers industry and their market caps are similar to LNKD’s market cap.

With the returns demonstrated by the aforementioned time-tested strategies, retail investors must always watch hedge fund and insider trading activity, and LinkedIn Corp (NYSE:LNKD) is an important part of this process.

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