Long Yahoo [based on sum-of-parts or negative stub value arbitrage]

Yahoo_5daychart_ after hours

Yahoo_5daychart_ afterhours

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.

Palm IIIc

Palm IIIc

Palm V

Palm V


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