Can Yahoo! Inc. (YHOO)’s Leading Fantasy Sports Position Pay Daily Dividends?

What have hedge funds been doing with Yahoo! Inc. (NASDAQ:YHOO)?

According to hedge fund experts at Insider Monkey, Daniel S. Och‘s OZ Management had the most valuable position in Yahoo! Inc. (NASDAQ:YHOO), worth close to $650.9 million held in about 14.65 million shares, corresponding to 2.1% of its total 13F portfolio. On OZ Management’s heels is D.E. Shaw & Co., L.P., managed by David E. Shaw, which held 12.43 million shares at the end of the first quarter, a $552.5 million position. Some other members of the smart money with similar optimism comprise Christian Leone’s Luxor Capital Group, Jeffrey Altman’s Owl Creek Asset Management, and Jeffrey Smith’s Starboard Value LP.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Hudson Bay Capital Management, managed by Sander Gerber, created the biggest position in Yahoo! Inc. (NASDAQ:YHOO) during the first quarter. Hudson Bay Capital Management had $144.5 million invested in the company at the end of the quarter, buying 3.25 million shares. Joshua Friedman and Mitchell Julis’ Canyon Capital Advisors also made a $50 million investment in the stock during the quarter, buying 1.13 million shares. Other funds with new positions in the stock included Thomas E. Claugus’ GMT Capital, Peter S. Park’s Park West Asset Management, and Ryan Pedlow’s Two Creeks Capital Management.

While this move will likely be underestimated by the market, we believe it has the potential to add a notable revenue stream to Yahoo’s books and that the company is in a strong existing position in the fantasy sports market to be able to steal a good deal of market share from the current players in daily fantasy sports gaming. With Yahoo’s core business still trading at close to zero value, and increased interest from the smart money in the stock, we believe Yahoo is a great buying opportunity for the long-term, though one that will continue to be greatly affected short-term by swings in Alibaba Group Holding Ltd (NYSE:BABA)’s shares.

Disclosure: None