Altaba Inc (AABA)

This has stakes in things like Yahoo Japan and Ali Baba (BABA-N). This has always been the attraction of this company. The legacy business is chugging along, so there is still some value. The stock has not done badly. It is just that in the last year or so it has started to come off quite sharply. Yahoo is one of those old legacy companies that does have some value in it, but it would probably help if management did something with the Ali Baba stake.

A company without any certainty of what they are going to do. They have to come out and articulate a real strategy other than selling off Alibaba (BABA-N) and getting a bunch of cash. Money is flowing into things like Facebook (FB-Q) right now which is firing on all cylinders and doesn’t have a challenged business model. He would prefer Facebook. You don’t need to be here.

People ran up the stock on Alibaba and other assets that they own. But the business is really not growing. The business has done well, but where do they grow from here?

It finally paid off with the BABA-N deal and he thinks you should have taken your money and run. He does not believe the yahoo search business is that easy to turn around.

You are going to get some cash from the sale of Alibaba. When you take out Alibaba, you have Yahoo for a negative value.

They are going to spin out their BABA-N stake. Own this and possibly short BABA-N. The market is attributing a negative value to the core business of YHOO-Q.

Disney (DIS-N) or Yahoo (YHOO-Q) for a one year Hold? Both stocks have done very, very well and are both in a period of seasonal strength right now. This is a technology company, and its period of strength tends to peak around the end of January. On this one you can hold a little longer. Consider taking some money off as you get into late January.

Looking at the fundamentals and the quants, the stock has done well because of Alibaba (BBA-N), but it is trading at around 35 or 40 times forward PE. Estimates for earnings growth are really uncertain, or at best flat. This is not one that he would own in his portfolio.

If he owned, he would move off the name. A lot of people held the name in anticipation of the Alibaba (BABA-N) spinoff. Thinks the competition is just too much.

It is valued based on the value of Alibaba so you get the rest of it for nothing.

Alibaba IPO is not that well known in terms of the retail public, but it is a tremendous IPO and rumours are that once it starts trading, it will come out at a $170 billion market cap. Because there is so little of it and so much demand, they will take it up to $200 billion quickly. Every $5 billion change in the market cap of Alibaba has the impact of almost $0.90 on Yahoo. Because of this, she is hearing that this company can get to $70.

(Market Call Minute.) You hold this until Ali Baba goes public and probably goes to a premium. They own 23% of Ali Baba.

The Alibaba IPO is going to be a business that might be worth more or worth less. It is going to be up to management to take the cash and turn it into something that is going to grow. This company has been struggling. His guess is that Alibaba is going to be a really, really volatile stock. You don’t need to be in the risk arbitrage business by owning this.

The Alibaba part of the story is really well known. There is a bit of a tax issue with how they monetize it in the future. They have decent acquisitions. Prefers APPL-O, GOOGL-O and FB-O. There are issues with Alibaba in terms of accounting and so on.

Seasonal strength for some of the Internet stocks tend to run from the beginning of September all the way through to the end of the year. Trends are still positive. 20 and 50 day moving averages are moving higher. He wouldn’t be surprised to see this pull back. If it comes down to its 50 day moving average, that would be a great buying opportunity.