Tomahawk, WI 09/19/2014 (Basicsmedia) – The frenzy behind Alibaba IPO has been of great benefit to Yahoo! Inc. (NASDAQ:YHOO), which has enjoyed an impressive run in the market although the momentum has started showing signs of cooling down. During an interview on CNBC, Ironfire Capital Founder and managing partner, Eric Jackson, reiterated that there is no need for alarm as it could be a sign of big institutions taking position in Yahoo’s stock
“Well, it’s been volatile for sure in the last week and half; the volume has been very abnormally high and Yahoo! Inc. (NASDAQ:YHOO) leading into the IPO. I think a lot of people maybe are trading out of it, but you can look at that volume in another way. I think that there are some big probably big institutions taking positions in the stock,” said Mr. Jackson.
Jackson sees an opening where Yahoo! Inc. (NASDAQ:YHOO) stands to benefit a great deal in tax efficiencies through it’s current stakes in Alibaba. Despite offloading some stakes during Alibaba’s IPO, Yahoo will still remain with a 16% stake in the giant Chinese online company meaning it gets to enjoy tax benefits with the company hosting its headquarters in China as opposed to the U.S.
“Some people think that after tomorrow, Yahoo! Inc. (NASDAQ:YHOO) is going to have no more exposure to Alibaba; that is just not true. I think two-thirds of what remains of Yahoo stock is still going to be’ weighted on where Alibaba goes from here and if there are tax efficiencies to be heard, that’s a big number. Potentially you are talking something like $13 per share in Yahoo stock price,” said Mr. Jackson.
Jackson argues that the tax synergies Yahoo stands to save in Alibaba are much higher than it’s stock price essentially giving it a better value than Alibaba going forward.