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Daniel Loeb Continues to Buy Yahoo Shares

July 26, 2012 | About:

Holly LaFon

255 followers
It is no surprise that Daniel Loeb likes Yahoo (YHOO), but another purchase of a parcel of shares affirmed it. On July 23 – a week after the company announced the appointment of new President and COE Marissa Miller – he added 4,212,400 Yahoo shares at about $15.76 per share.

Loeb began amassing his Yahoo stock in 2011, the year the company’s revenue dropped to $5 billion from $6.3 billion the previous year, its lowest level since 2004. It immediately became clear through a vociferous and public letter-writing campaign Loeb launched that he wanted to force change at the company. One of his victories was ousting the company’s then-CEO, Scott Thompson, after exposing untruths on Thompson’s resume in May. Shortly thereafter, he won a seat on the board of directors that hired Mayer.

Loeb also presented a litany of the problems he perceived at the company at the Salt conference in May. In addition to management bungling good opportunities, he said, the company has “missed every important trend on the Internet: social, local, you name it,” according to CNBC.

Nevertheless, Yahoo’s stock has increased about 15% since he originally purchased shares.

The company’s second-quarter results did not reflect positive benefits from the year’s changes. GAAP revenue was $1.2 billion, decreased 1 percent from the second quarter of 2011. GAAP net earnings per diluted share were $0.18, flat over the previous year.

The company did announce a slew of business highlights, including new partnerships with CNBC, Clear Channel and Spotify, and strategic agreements with Alibaba and Facebook (FB).

Yahoo’s agreement with Facebook is to launch a new advertising partnership, extend and expand distribution arrangements, and settle their existing patent claims against each other.

The strategic agreement with Alibaba reached in May is for Alibaba to repurchase up to half of Yahoo’s stake in it for about $7.1 billion, as the first step in a multi-stage plan for “value realization.” Yahoo will cash out its remaining stake in Alibaba in stages, the first being a requirement for Alibaba, should it go public, to either repurchase one-quarter of Yahoo’s current stake at the IPO price or allow Yahoo to sell those shares in the IPO. Following the IPO, Alibaba is also required to help Yahoo dispose of its remaining shares.

Loeb’s stake in Yahoo now totals 74,712,800 shares, or 6.11% of its outstanding shares. For more of Loeb’s buys and sells, see his portfolio here.

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