Yahoo’s actual own core business (which generates more than $1 billion a year) is now valued at -$500 million, based on negative stub valuation:
Yahoo Stock Gets Crushed As Alibaba IPOs — Core Business Now Valued At Less Than Zero
Pretty good numbers crunching valuations carried out here, with some event-conditional Yahoo/Softbank/Alibaba scenario-ing, and a useful table with a handy and quick YHOO/BABA price ratio heuristic:
Imma Be a BABA Bull: Yahoo, the Morning After
So. Go YHOO/BABA? (long YHOO/short BABA)
What’s the stock borrow fee like on BABA, and is it even available for short borrowing?
How many “relative value/event arbitrage” traders got killed putting on the long 3Com/short Palm value trade 15 years ago…
Safer to just long YHOO.
[Sum-of-parts or negative stub value arbitrage, 3Com/Palm example:
Negative Stubs – a review of the equity carve-out of Palm from 3Com
“Since stock prices can never fall below zero, a negative stub value is highly unusual.”
Brings back memories of my old series of PalmPilots, from the bulky plasticky IIIc to the sleek metallic Palm V.