New Trade: Long LinkedIn (LNKD) & Short Salesforce (CRM)

By: ispeculatornew
Date posted: 03.31.2014 (3:00 am) | Write a Comment  (0 Comments)

      Post a Comment

As you have hopefully seen, I will be closing 1 trade this morning, on LNKD and P. As you can now guess, it’s not about closing a long on LinkedIn but rather about not wanting to keep that short Pandora short for too long.  To date, it’s been a great year of trading as the average long & short trade has returned around 8%.  The year is still young though so I won’t celebrate anytime soon. Truth be told, even year end isn’t really time to celebrate given the fact that it’s right back at square 0 afterwards:)

As will be the case all year, my long & short stock picks will be available to see in my live spreadsheet:

You can see the numbers for both companies involved in today’s trade here:

TickerNamePriceDividend YieldPayout RatioEx-Dvd
WINWindstream Holdings Inc9.110.99250.776/26/2014
DODiamond Offshore Drilling Inc51.66.7888.697/31/2014
FTRFrontier Communications Corp66.67362.426/11/2014
CTLCenturyLink Inc34.846.2#VALUE!5/30/2014
ESVEnsco PLC50.755.9136.96/12/2014
RIGTransocean Ltd42.855.2363.795/28/2014
HCPHCP Inc42.25.17106.925/8/2014
TAT&T Inc35.765.1553.137/9/2014
KMIKinder Morgan Inc/DE32.745.13138.487/31/2014
HCNHealth Care REIT Inc63.5453110.775/8/2014
TETECO Energy Inc17.914.9196.665/9/2014
NENoble Corp plc30.944.8525.28/7/2014
MOAltria Group Inc39.894.8181.436/13/2014
RAIReynolds American Inc55.944.7978.666/11/2014
SOSouthern Co/The44.494.72107.367/31/2014
TEGIntegrys Energy Group Inc58.564.6461.885/28/2014
PBCTPeople's United Financial Inc14.324.6187.677/30/2014
ETREntergy Corp73.134.5483.115/13/2014
DRIDarden Restaurants Inc49.114.4864.097/7/2014
VZVerizon Communications Inc47.394.4751.737/9/2014
EDConsolidated Edison Inc57.034.4267.895/12/2014
PMPhilip Morris International Inc85.344.4167.716/24/2014
PPLPPL Corp34.364.3479.796/10/2014
VTRVentas Inc66.984.33164.066/6/2014
FEFirstEnergy Corp33.424.31245.238/5/2014
DUKDuke Energy Corp73.524.2482.385/14/2014
LOLorillard Inc58.384.2169.925/28/2014
PNWPinnacle West Capital Corp54.664.1560.317/31/2014
PCGPG&E Corp44.864.06100.616/30/2014
SCGSCANA Corp52.254.0260.36/6/2014
PCLPlum Creek Timber Co Inc44.063.99135.515/14/2014
POMPepco Holdings Inc27.143.98245.456/6/2014
AEEAmeren Corp40.623.9475.816/9/2014
KIMKimco Realty Corp22.933.92174.486/30/2014
CNPCenterPoint Energy Inc24.473.88114.155/14/2014
IRMIron Mountain Inc27.83.88213.916/18/2014
MATMattel Inc39.343.8655.25/21/2014
XELXcel Energy Inc31.243.8458.436/17/2014
SPLSStaples Inc12.553.8244.266/25/2014
MACMacerich Co/The65.013.81208.325/7/2014
AEPAmerican Electric Power Co Inc53.363.7564.465/7/2014
PEGPublic Service Enterprise Group Inc39.623.7458.576/4/2014
KRFTKraft Foods Group Inc56.263.7345.056/26/2014
WMBWilliams Cos Inc/The43.523.7222.626/4/2014
FCXFreeport-McMoRan Copper & Gold Inc34.073.6784.827/10/2014
LEGLeggett & Platt Inc32.673.6787.716/18/2014
GASAGL Resources Inc53.53.6670.935/14/2014
CMSCMS Energy Corp29.783.6359.698/6/2014
CINFCincinnati Financial Corp49.023.5952.226/16/2014
CVCCablevision Systems Corp173.53122.865/13/2014
OKEONEOK Inc63.733.51114.418/6/2014
IGTInternational Game Technology12.563.532.746/17/2014
PFEPfizer Inc29.963.4757.685/7/2014
GMEGameStop Corp38.153.4637.215/22/2014
GMGeneral Motors Co34.753.4506/6/2014
INTCIntel Corp26.173.4446.568/7/2014
EXCExelon Corp36.243.4273.555/13/2014
CVXChevron Corp125.363.4134.895/15/2014
STXSeagate Technology PLC50.513.4128.185/12/2014
WMWaste Management Inc44.113.4696.946/10/2014
SESpectra Energy Corp39.63.38795/7/2014
NUNortheast Utilities46.623.3759.455/28/2014
PAYXPaychex Inc41.493.3783.785/8/2014
DDominion Resources Inc/VA71.163.3772.885/28/2014
CACA Inc29.663.3748.486/9/2014
DTEDTE Energy Co77.933.3668.536/12/2014
AVBAvalonBay Communities Inc138.243.36932.946/30/2014
GRMNGarmin Ltd57.483.3460.316/13/2014
LLYEli Lilly & Co58.883.3344.895/13/2014
CSCOCisco Systems Inc22.963.3133.167/1/2014
GEGeneral Electric Co26.583.3153.116/26/2014
AIVApartment Investment & Management Co31.473.3335.825/14/2014
CAGConAgra Foods Inc30.353.2952.557/30/2014
EQREquity Residential60.793.29#VALUE!6/19/2014
ABBVAbbVie Inc51.363.2776.997/9/2014
PSAPublic Storage171.933.26105.026/11/2014
WECWisconsin Energy Corp48.023.2556.965/12/2014
CLXClorox Co/The87.313.2560.067/21/2014
LMTLockheed Martin Corp165.123.22525/29/2014
PLDPrologis Inc41.193.2288.826/9/2014
MCDMcDonald's Corp101.143.255.55/30/2014
FFord Motor Co15.743.18227/28/2014
PGProcter & Gamble Co/The81.73.1556.757/16/2014
SYYSysco Corp37.193.1265.997/2/2014
COHCoach Inc43.393.1133.736/4/2014
HASHasbro Inc55.523.172.887/29/2014
GISGeneral Mills Inc53.013.0946.797/7/2014
WUWestern Union Co/The16.273.0734.726/12/2014
PEPPepsiCo Inc85.913.0551.25/28/2014
KMBKimberly-Clark Corp110.233.0558.086/4/2014
IPInternational Paper Co45.883.0541.055/23/2014
OXYOccidental Petroleum Corp94.73.0434.96/6/2014
MCHPMicrochip Technology Inc46.763.04214.955/20/2014
DOWDow Chemical Co/The49.36334.446/26/2014
MRKMerck & Co Inc58.633116.536/12/2014
KOCoca-Cola Co/The40.762.9957.856/12/2014
SPGSimon Property Group Inc174.052.99112.095/14/2014
LYBLyondellBasell Industries NV93.662.9929.38/14/2014
SYMCSymantec Corp20.12.9905/22/2014

Again, the trend looks terrible for LNKD and I generally stay away from companies that have such numbers. I am a believer in LNKD though and do think they will turn this around.

CRM Revenue (Quarterly YoY Growth) Chart

CRM Revenue (Quarterly YoY Growth) data by YCharts

$LNKDLong LinkedIn (LNKD)

I’ve been a long time believer in LNKD but have never been able to make it a long term holding because the valuation never made sense. It has come down mostly on growth concerns but not enough for me to buy outright. I do like to buy it on a long & short basis though because I do think that LNKD has done a good job of diversifying its revenue sources and that some of the concerns have been overblown. It makes little sense for example to look at y/y traffic to its website (which has been declining) without considering use of its mobile apps in a world where everything is moving towards mobile. I do think that LNKD is a no-brainer when I compare it to a stock such as CRM which is trading at a comparable valuation.


Next earnings release: May 2nd 2014

$CRMShort (CRM)

I’m certainly a believer in cloud-based software and I do think Salesforce has a terrific business but the results have lagged in recent years and it’s difficult for me to see how CRM would warrant such a valuation. When I look at diluted EPS (normalized) for the past few years, here is what I see:

2011: $0.12
2012: ($0.01)
2013: ($0.31)
2014: ($0.39)

Needless to say that things are not going in the right direction. They’ll eventually turn things around I believe but until there are clear signs that it will happen, I can’t imagine buying CRM at its 80 forward P/E.


Next earnings release: May 23rd 2014

Disclaimer: Long LNKD and no positions on Salesforce (CRM) but I will initiate the trade on the open today

If you liked this post, you can consider subscribing to our free newsletters here

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.