The following chart will come as no surprise to value investors, but the point needs to be re-iterated. Linkedin got at least five upgrades following their strong quarterly earnings (I say at least because we do not get access to every firm so it could be even more). I am not attacking the sell side. In fact, I believe the buys ide loves to bash the sell side, but the buy side is just as guilty yet receives less criticism. Three quick things to note:
1. Linkedin closed on Thursday at around 124. Ever single firm which upped the price target (and those that didn’t) automatically got a 20% ‘boost’ as they issued the report after the stock was up 20% or so. This highly inflates their track record and is a bit disingenuous.
2. Linkedin closed on Friday at $150.48. Every firm which raised their price target to a number very close to $150. As the stock moves up or down, they will likely up or lower it as well (see Apple as one recent example). This is a way to hedge their bets, and basically sets up a scenario where they can never actually be proven wrong.
Third Point's Dan Loeb discusses their new positions in a letter to investor reviewed by ValueWalk. Stay tuned for more coverage. Loeb notes some new purchases as follows: Third Point’s investment in Grab is an excellent example of our ability to “lifecycle invest” by being a thought and financial partner from growth capital stages to Read More
3. Linkedin has a PE of over 600, yet at least five firms gave an upgrade. Linkedin is a great site, which is one of the reasons that it is the 14th most visited site in the world (according to Alexa.com). However, it seems valuation is small concern to these firms, as they expect the company to keep growing earnings rapidly over the next several years.
I hope to expand a bit on this topic on the future, but for now draw your own conclusions.
Disclosure: No position