Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Candy for Yahoo! Inc. (YHOO)’s Investors after Alibaba Group Holding Ltd (BABA)’s IPO

Yahoo! Inc. (NASDAQ:YHOO) is going to treat its investors with around $3 bilion after it sells 27% of its stake in Alibaba Group Holding Ltd (NYSE:BABA) during the IPO. CNBC‘s Josh Lipton reported on Yahoo! Inc. (NASDAQ:YHOO)’s plans and options on handling the hefty amount of cash that it is going to land itself.

Yahoo icon

Lipton said that analysts at B. Riley & Co want to see this $3 billion spent on dividends and share buy-back programs. Sameet Sinha, who is a senior analyst at B. Riley & Co, expressed the same view in an interview on CNBC. He talked about how the synergy of the two approaches creates more value for the shareholders.

“A dividend gets some different type of investors into the stock. they are more sticky. They hold on to it for a while for the income potential and the share buyback supports the value of the stock in case a number of shareholders decide to sell it,” said Sinha.

It is estimated that Yahoo! Inc. (NASDAQ:YHOO) will earn around $6 billion after tax if Alibaba Group Holding Ltd (NYSE:BABA)’s IPO sells at around $68 per share, according to Lipton. Since Yahoo! Inc. (NASDAQ:YHOO) has promised to give its shareholders half of that return, the investors of the technology company can expect their share of the candy to be in the vicinity of $3 billion.

Alibaba Group Holding Ltd (NYSE:BABA)’s IPO comes at a time when Yahoo! Inc. (NASDAQ:YHOO)’s core business of advertising is in a bit of a struggling situation. Yahoo! Inc. (NASDAQ:YHOO) has options in terms of diversifying its revenue stream with the help of the money that it gets from selling some of its stake in Alibaba Group Holding Ltd (NYSE:BABA). Lipton said that there might be a couple of acquisition options that the management of the company has probably lined up to this end.

Yahoo! Inc. (NASDAQ:YHOO) will still maintain around 16%  stake in Alibaba Group Holding Ltd (NYSE:BABA) after the IPO to benefit from the success of the e-commerce giant in future.

Warren Buffett and BillionairesFree Report: Warren Buffett and 12 Billionaires Are Crazy About These 7 Stocks

Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW for all the details.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!