At the recent IPO of Alibaba Yahoo is looking for around $5.1 billion after tax and they still own around 16% of Alibaba. Yahoo has stated that it will use this cash to improve it's business and distribute around half of the cash to shareholders due dividend's or share buybacks. By improving business, rumor says that Yahoo will most likely make an acquisition, Lot's of talk towards AOL Inc (NYSE: AOL).
I bought 31 shares of Yahoo Inc (YHOO) worth around $1320
I also updated my portfolio.
There also has been lot of talk about Yahoo being a target towards an activist investors, such as Carl Icahn or Bill Ackmann.
John Brown at CNBC sad:
“I think this is bait for an activist. I actually think this is the number one target now for activist shareholders, hedge funds, in America. There is absolutely no way, in my opinion, they’re going to allow this management team, this board of directors, to take $6 billion, do a buyback, and then have another free $6 billion in cash to experiment; it’s not going to happen,”This would not be new situation for Yahoo. At 2011 Dan Loeb began taking a huge stake at Yahoo somewhat around 60 million shares, got a seat at company's board, did his thing and after two years later he sold majority of his position, gave up his seat and walked away with around $1 billion profit.
Yahoo needs to do some smart moves from now on to convince the investors. There are a lot of different scenarios for this one, and no one rely knows how it plays out. I'm eager to see what is going to happen, will some big buck investor come and make a big buy, and how all the money will be spend. Also the upscale could come from a success of Alibaba as Yahoo owns around 16% of Baba, So there are definitely a lot going on.
Some websites states that Yahoo is currently undervalued, some says it comes crashing down since there is not a lot of trust towards the Yahoo's core business and the management team, but you rely cant tell.
As a dividend investors point of view, this might not be an ideal deal. Since Yahoo does not pay dividend at all, except the current situation that they might pay a dividend or do a share buyback, if the do pay full amount of dividend (half of $5.1 b) we should be looking for around $2.50 more or less.
One smart man once sad that" It's better to be in the game, than out of it." So I'm in and next few weeks will tell me more what I'm going to do about this position.
And if it's not playing out well for me then at least i can say they have a hot CEO.
What do think about this? Did you buy Yahoo or Alibaba?
Thanks for reading