If I understand this board correctly, it’s not so much about Saul’s portfolio but about his method of picking stocks. In that light let me say why I’m avoiding YELP.
As I said earlier, I like Internet Information Providers and YELP fits that category so it’s on my watch list. After responding to the Z thread I noticed that YELP is down over 50% from its recent high. Time to investigate. I look at the chart, looks like Mt. Fuji. Why? I look up the Foolish YELP board, very little activity, only three posts in 2014. Peter Lynch would like that. The Yahoo summary page has a P/E of around 90. Good news, it’s finally making a profit. The run-up to over 100 was when they were losing money. That’s good news too. Time to dig deeper, go for the 10-Q. Bad news, they have class A and class B common stock. Class B, the insiders, get ten votes each for just one for class A.
I have a problem with insiders having more votes. They are not going to look out for everyone the same way. If they want my money but not my opinion they can sell me non-callable bonds or preferred shares with cumulative dividends. But to run the same risk with less protection is stupid. It’s the reason why I never bought GOOG. Yelp is now off my list.
Denny Schlesinger
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I’m holding a small (1.1%) position in YELP. It’s part of my social family of FB (3.2%), LNKD (2.1%), TWTR (2.1%). The thing I like about all of these are the moats - the user bases are huge, it’d be very hard for someone else to come in at take away tens or hundreds of millions of users. And they are all figuring out how to be more profitable with the users they have. I also think the products are quite good (though TWTR’s is too hard to use currently).
For YELP I see revenue growth slowly dropping from 69% to 61% over the past year, and the last quarterly revenue growth is 89% (it is slowing down as well). I have the PE at 56 based on non-GAAP earnings.
As for the 2-tiered classes of stock, this is like GOOG yes? This isn’t something I’ve been paying attention to much or know much about, so agree could be a good thread in the making. Thanks.
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I have a problem with insiders having more votes. They are not going to look out for everyone the same way.
Of course they will look after their self interest first. So what?
Of all the good reasons to not own a company (i.e., no earnings, stratospheric valuation, etc), the two classes of stock I find the least concerning. I dutifully vote my shares while being fully cognizant that I will never hold a large enough position in any company to have even the slightest influence. I invariably vote against executive compensation because I think virtually all of them are obscenely overpaid, but it’s a token gesture, not a meaningful vote.
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