John Burbank
has disclosed ownership of 6.3% of Yelp Inc. (
YELP
), According to GuruFocus Real Time Picks. The manager of global
investment firm Passport Capital bought 1,065,261 shares of the
company on Jan. 25, when the price was $21.17, on average.
Yelp, the consumer review company that aims to become "the de
facto local search engine," saw its stock decline almost 18% over
the last year. But since the start of 2013 it has lifted 7%.
Passport Capital considers both macroeconomic trends and company
fundamentals in its stock selection process. The purchase of Yelp
adds to his sizable third quarter portfolio weighting in online
media and Internet stocks. In the third quarter of 2012 he bought
Internet companies HomeAway Inc. (
AWAY
), Zynga (
ZNGA
), Groupon Inc. (
GRPN
), Amazon.com (
AMZN
), Opentable Inc. (
OPEN
). He also augmented positions in Google Inc. (
GOOG
), Priceline.com (
PCLN
) and eBay (
EBAY
).
Burbank did not embrace Internet stocks wholesale, as he
eliminated his position in LinkedIn Corp. (
LNKD
) and SINA Corp. (
SINA
) during the quarter.
On a more macro level, Burbank said several days before the Yelp
purchase
on Bloomberg
that he predicts equities will outperform bonds. He also shared
what he is finding most attractive, including Internet stocks:
"We like mid- and larger-cap companies that are high quality and
generally world-class leaders. We like companies that have
premium shareholder orientation and governance. We think however
companies that are predicated on global GDP growth, things that
have flawed business models, things with poor governance are
shorts and things to be avoided. I do not believe everything is
going up. I do believe that in this market, premium companies are
going to get rewarded because I would say that governance is
probably at an all-time high, certainly in my career. I see
companies rewarding shareholders and being aligned with
shareholders more than I've ever seen before. So we want to stay
with those. So I like things across the board, actually, we can
find these kinds of situations. I like things in health care, I
like Internet. I like certain things in consumer, although I'm
very cautious on the U.S. consumer right now and U.S. consumer
stocks. I like certain things in basic materials like specialty
chemicals, very few gold names, and I'm very, very cautious,
however, on global growth..."
Yelp in the first nine months of 2012 reported $96.4 million in
net revenue, increased 65% from the first nine months of 2011.
Yelp derives most of its revenue from local and brand
advertising, and the remainder from other services.
It also incurred a net loss of $13.8 million, or $0.27 per share,
compared to a net loss of $7.8 million, or $0.52, the previous
year. More information about Yelp is available at its
10-year financials page
.
The company is focused on mobile and global expansion. In the
first nine months of 2012, it launched in 18 international
markets, including Helsinki and Singapore in the third quarter,
increasing its worldwide markets to a total of 96. It has not,
however, generated significant revenue from its international
markets as of Sept. 30, 2012.
Yelp also saw its mobile app used on approximately 8 million
unique mobile devices on monthly average.
For the full year 2012, it is expecting 64% year-over-year
revenue growth and adjusted EBITDA in the range of $3.5 million
to $4 million. It does not expect to be profitable in 2012 due to
its philosophy of reinvesting into growth and recent acquisition
of Qype, a Germany-based consumer review company.
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