the YHOO opportunity

Hello everybody,

Recently, I’ve been reading a number of different articles around fooldom and the internet on the potential investment opportunity in Yahoo and my interest has been peaked.

When you consider Yahoo’s stake in Alibaba, Yahoo Japan and the upcoming spin off company, is Yahoo ridiculously cheap at today’s price? Is the market confused and not sure how to value Yahoo?

This quote is from a recent piece on Yahoo and its balance sheets relationship to Alibaba.

The Yahoo market cap is around $44 billion. That valuation includes its ownership of 15.4 percent of the Chinese e-commerce giant Alibaba. That’s worth about $38 billion. Yahoo also has a longstanding investment in Yahoo Japan, a separate company it co-founded in 1996. It’s worth around $7 billion. Those numbers can fluctuate. But there are days when you add those up and you can reach the odd actuarial conclusion that Yahoo’s core business—which has been looking a lot better since Mayer got there—has negative value.…

Yahoo has negative value? On the surface this looks like an incredible opportunity.

Another quote from the same piece that refers to Yahoo after the Alibaba spinoff.

Still, Yahoo’s valuation will be more reflective of its actual worth. Mayer thinks it should be a lot. “It’s sort of funny,” she says, “because as I was preparing my earnings script for the Q4 earnings call, I put a line in saying that, if broken out on its own, [Yahoo] would clearly be one of the fastest growing startups in the world. And legal asked, are you sure? I told them, I’m not sure that I can point to anything that’s growing faster than that.”

If I understand this correctly, I can buy shares in one of the fastest growing tech startups for no premium?

It seems like there is a lot of hidden value still in Yahoo shares that will be revealed once Yahoo spins off their Alibaba stake into the new company.

Maybe I’m not understanding this correctly? Is there something I’m overlooking? I’m looking for bears or anybody to burst my bubble.

With everything in play, this seems like a really unique situation. Does that make today’s Yahoo price a steal?

Does anyone have any perspective to add?

Small YHOO position that I’m thinking about increasing