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Alternative Market Briefing

Hedge funds buying Yahoo stocks ahead of Alibaba IPO

Thursday, August 28, 2014

Komfie Manalo, Opalesque Asia:

Several hedge funds are buying large shares of Yahoo ahead of the planned initial public offering (IPO) of Chinese e-commerce giant Alibaba. Ken Sawyer, managing director of Saints Capital, said that Yahoo, which owns 23% of Alibaba and is a public investor of the Chinese website, has placed a discount on whether a holding company is worth the sum of the value of its parts.

Sawyer was quoted by USA Today as saying, "Some guys think there might be 15% or 20% in Yahoo, if Alibaba's investment bankers can sell the offering at the top of its range or — as Facebook's did — even higher. It's an (arbitrage) play between public and private markets."

He explained that hedge fund investors are attracted to Yahoo stocks despite Alibaba’s pre-IPO shares offer bigger gains as Yahoo does not have lock-up periods or other sale restriction of its private shares in the company.

Holders of Alibaba stocks will have to wait from six months or longer before they can sell their shares. This exposes them to longer risk compared to public investors, such as Yahoo shareholders, who can sell their shares anytime.

Earlier, it was reported that a small group ......................

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