Dan Loeb Reduces Largest Holding, Yahoo!


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Daniel Loeb reduced his position in largest holding Yahoo Inc. ( YHOO ) by 15.07% on Feb. 1, 2012, according to GuruFocus Real Time Picks . After the sale, he owns 62,000,000 shares. The founder of hedge fund Third Point LLC began building his 6.17% Yahoo stake in the third quarter of 2011 when the price averaged about $14 per share. Loeb chose to trim the position after a strong rally in the stock, implying he may believe its current three-year high share price is near its intrinsic value.

Yahoo shares began to move in October 2012, and have gained 21% in the last six months to date. On Monday, the price fell 2.13% to close at $19.34 a share, giving Loeb a substantial gain.

The first month of the new year was a positive start for Loeb, coming off an outperforming year. After returning 21.2% at his Offshore Fund versus 16% for the S&P 500 in 2012, he was up 4.8% in January.

Loeb has been actively involved in a turnaround prominent search engine since initiating his stake in the company, aiding in a CEO ouster, a CEO appointment and the sale of Yahoo's Chinese interest.

Yahoo's shares began to soar in October when the company announced its third quarter results. It had $1.089 billion in revenue excluding traffic acquisition costs, a 2% year-over-year increase, and $1.202 billion in GAAP revenue, a 1% decrease year over year.

GAAP net income jumped to $2.64 per diluted share, compared to $0.23 in the third quarter of 2011.

The company also finished the first stage of the sale of Alibaba, from which it received $7.6 billion in pre-tax proceeds. It plans to return $3.65 billion, or 85% of that to shareholders. The proceeds helped replenish Yahoo's amount of cash to $9.4 billion, compared to $2.5 billion at year-end 2011.

In the third quarter, Yahoo repurchased 12 million shares for a total cost of $190 million.

The company has a P/E ratio of 5.8. Its P/B ratio of 1.46 is close to a one-year high, and its P/S ratio of 4.56 is close to a three-year high.

GuruFocus Real Time Picks alerts you for the stock purchases and sales that Gurus have made within the last two days. Follow your favorite Gurus closely with GuruFocus' Premium Membership! If you are not a Premium Member, we invite you for a 7-Day Free Trial .About GuruFocus: GuruFocus.com tracks the stocks picks and portfolio holdings of the world's best investors. This value investing site offers stock screeners and valuation tools. And publishes daily articles tracking the latest moves of the world's best investors. GuruFocus also provides promising stock ideas in 3 monthly newsletters sent to Premium Members .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing

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