Daniel Loeb sells 40 million shares of Yahoo

The hedge fund activist has done very, very well out of his investment.

By GuruFocus.com Jul 25, 2013 2:28PM
Comstock, CorbisOn July 22 Daniel Loeb decreased his position in Yahoo (YHOO) by 66.77%. The hedge fund manager sold a total of 41,400,000 shares at an average price of $29.11 per share. This sell came as Yahoo announced it would be repurchasing 40 million shares held by Loeb's fund, Third Point. The purchase price equaled the closing price of Yahoo common stock on July 19. 

Since this sell, the price per share has dropped approximately 3%. As of the first quarter Loeb held 5.63% of the company's shares outstanding, but as of his most recent sell he holds 1.87% of Yahoo's shares. Loeb now owns 20,600,000 shares of Yahoo, keeping him as the top shareholder. 

Loeb put a lot of time and money into his turnaround vision for Yahoo, and it has shown great success thus far as his most recent sell locks in a massive $665 million paycheck for Third Point. It was Loeb who helped remove former CEO Scott Thompson, which led to current CEO Marissa Mayer's arrival. 

"I'm confident that with Marissa at the helm and her team's focus on innovation and engaging users, Yahoo has a bright future," Loeb said in a statement.

According to GuruFocus' trade information, since Loeb's initial buy, the fund cashed out at an impressive 129% gain. 

Yahoo, the multinational Internet corporation, has been in a period of reconstruction over the past year. Yahoo brought in CEO Marissa Mayer to reestablish the company, and since announcing her hiring, the company's shares have risen over 70%. During Mayer's first year as CEO, she has managed a massive makeover of Yahoo, but the company still has significant room for improvement as it sits beneath an advertising environment dominated by Google (GOOG) and Facebook (FB).

Third Point plans to maintain 20 million Yahoo shares. CEO Marissa Mayer had the following to say about Loeb and Third Point:

Daniel Loeb had the vision to see Yahoo for its immense potential -- the potential to return to greatness as a company and the potential to deliver significant shareholder value. . . . While there's still a lot of work ahead, they've given us a great foundation.

Yahoo's historical price, revenue and net income:



The Peter Lynch Chart shows that despite recent growth, Yahoo! still appears to be undervalued:



Yahoo recently released its second-quarter results recently which reported:
  • GAAP revenue of $1.135 billion, versus $1.218 billion from the second quarter 2012 representing a 7% decrease.
  • GAAP net earnings per diluted share up 68% to $0.30
  • Non-GAAP net earnings per diluted share up 19% to $0.35
  • Adjusted EBITDA for the second quarter was $369 million, a 7% decrease compared to the same period 2012.

According to the GuruFocus analysis of Yahoo's earnings: 
  • The revenue has been in decline over the past five years.
  • The price is near a 5-year high of $29.11.
  • The company has comfortable interest coverage. 
  • Yahoo has seen recent expansion in its operating margin. 

Yahoo has a market cap of $30.25 billion. Its shares are currently being traded at around $27.44 with a P/E ratio of 7.90, a P/S ratio of 6.50 and a P/B ratio of 2.20. The company has seen an annual average earnings growth of 7.6% over the past 10 years. 

More from GuruFocus


2Comments
Jul 25, 2013 4:35PM
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This this is a deadbeat article, I thought I'd hijack the Comments Portal to talk about the REALLY IMPORTANT issue MSN is running through (AP) so it doesn't have any Comment Portal for Free Speech and First Amendment Rights. The Chicago Pension Fund is seriously under-funded and the Chicago lawmakers (mostly GOP) could care less. Governor Pat Quinn (IL) removed lawmaker pay from the State Budget and won't restore it until they address the issue. THIS IS THE FIRST PERSON WITH THE BALLS TO COMPROMISE THE GOP STANDING IN THE WAY OF FREEDOM AND FAIRNESS. Those pensioners invested in that fund. It's theirs. DETROIT is no different. I'd rather see PEOPLE get what they were promised and both financial tyranny and business platforms crumble into dust. Obviously, the Lords of New World Order will engage in diarrhea festivals tonight as they dig up some no-ethic lawyer goon squad to attack the Governor with. DEADBEATS will make sure they get theirs BEFORE dealing with issues involving fairness. Get you 2x4's out Chicago... when the lawyers come out of the darkness, just start swinging and don't stop. G.O.P. R.I.P. The sooner the better for We The People of the United States. You are a HERO, Quinn... stay the course!
Jul 25, 2013 4:40PM
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News FLASH... Amazon has no balls or ethics. They wait until after the markets are closed so a bad day with a modest loss can be bolstered by Ben Bernanke and his Fiat Federal Reserve at the last minute to end the day in the black. You're a crappy company Amazon... we don't need the likes of you in America. If you want to pump cheap Chinese drop-shipped crap to cheap Gen X & Y losers trying to get out of Sales Tax... MOVE TO CHINA AND CORRUPT THEIR ECONOMY.
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