Yahoo! Inc. (NASDAQ:YHOO)’s growing presence in Asia, particularly their holdings in Chinese e-commerce giant Alibaba, is making them an attractive stock to investors, some of whom consider it undervalued at its current market rate. Speaking on Bloomberg’s “Countdown” this morning, Patrick Armstrong, chief investment officer at Plurimi Investment Managers laid out some of the reasoning behind their favorable opinion of Yahoo! Inc. (NASDAQ:YHOO)’s stock.
“Yahoo’s our biggest holding, and that’s trading into the Alibaba IPO in September. Yahoo owns 23% of Alibaba. The Bloomberg consensus has Alibaba IPO’ing at $200 billion. If you just do the math on that, Yahoo’s got 23% of that, that puts you to $46 billion worth of Alibaba stock [...],” Armstrong said.
As Armstrong pointed out, that alone is significantly higher than the mere $36 billion market cap of Yahoo!, though he did concede that the company will likely need to pay $10 billion in taxes on those shares if it decides to sell them into the market. In addition to that Alibaba stake, Yahoo! Inc. (NASDAQ:YHOO) also has a $9 billion stake in Yahoo Japan, as well as $3 billion in cash.
Yahoo! Inc. (NASDAQ:YHOO) has been aggressively expanding since Marissa Mayer took over as CEO in July, 2012, purchasing dozens of companies including Tumblr, Qwiki, Rockmelt, and Blink. While the majority of those companies have been American, Yahoo! Inc. (NASDAQ:YHOO) has made expanding its presence in Asia a priority, and with their U.S business having been in decline for years, that has long been seen as their potential lifeline and where the majority of their value lies.
Armstrong detailed the strength they see in a handful of other companies with strong exposure in Asia as well, which included The Coca-Cola Company (NYSE:KO), as well as European stocks BMW and L’Oreal.