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David Jackson  

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  • Google, Yahoo also showed interest in Flipboard [View news story]
    Not sure how happy the value investors who own YHOO will be to hear that it's considering this sort of acquisition.
    May 27, 2015. 10:28 AM | Likes Like |Link to Comment
  • Thoughts On Yahoo (And Alibaba) [View article]
    satyr, I think you've put your finger on the core issue here: What was priced into YHOO, and -- more generally -- how can you assess what's priced into a stock?

    I would argue that the easiest way to assess whether some information is priced into a stock is to look at how prevalent it is.

    In YHOO's case, information about the BABA stock spin-off was everywhere:

    (1) YHOO had discussed it openly on its conference call (along with its plans to monetize its stake in Yahoo Japan)

    (2) Seeking Alpha had carried many articles discussing Yahoo's sum of the parts (SOTP) valuation and the catalyst of the BABA stock spin-off. See: http://bit.ly/1IQJNUu

    (3) Many of the comment discussions on Seeking Alpha YHOO articles were discussions the mechanics of the spin-off and the SOTP valuation.

    This was the core of my discussion with Chris DeMuth in the first comments on his article: http://seekingalpha.co...

    Chris argued that "Why should something this big and this obvious be hidden in plain sight? Its size is pretty large for the price to be corrected by the typical aggregate position sizes of relative value arbitrage and event driven funds."

    See Chris's comments here:
    http://seekingalpha.co...
    and
    http://seekingalpha.co...

    Overall, my personal take-away from this is that the simple approach to assessing what's priced in is more reliable: If something is being widely discussed, assume it's in the price.

    This is one of the ways that Seeking Alpha is helpful for investors: you can check the articles on a stock to understand which issues are priced in to a stock, and which aren't. This becomes much easier and more powerful with a feature we just added to PRO: for any stock, you can quickly view the Long Case and the Short Case, which we created by providing a quick view of the bullet point summaries of the long and short articles on the stock respectively.
    May 21, 2015. 02:09 AM | 1 Like Like |Link to Comment
  • Thoughts On Yahoo (And Alibaba) [View article]
    A Fraser,

    Do you know of any investors who were long BABA, short YHOO? I've heard from investors who were long YHOO, short BABA, but nobody for whom the opposite was true. And that makes sense: YHOO had a catalyst for unleashing its sum of the parts (SOTP) value. As I mentioned in the article, that's why this move was so painful for many people -- they got burned on both sides of the pair trade.

    Moreover, the news about the IRS statement was widely reported as the cause for the move in the stock.

    For that reason, I'm skeptical that "The only reason YHOO is down is because of investors hedging long BABA positions with short YHOO positions". But open to being convinced otherwise...
    May 21, 2015. 01:43 AM | 1 Like Like |Link to Comment
  • Thoughts On Yahoo (And Alibaba) [View article]
    Quick follow up to my comment in the article that Yahoo's stock is more attractive now than a few days ago. The sell-side is also defending the stock. For example, here's what one desk sent to its clients this morning:

    YHOO (+1% pre-mkt to $41.50 after -8% late yday) – IRS considering changes to spin-off rules…requests already received proceeding (such as the BABA spin), but “that could change”…[our analyst] reits Buy / PT $56 (BABA ~$38 + YHOO Japan ~$5.65 + net cash $6 + core YHOO ~$6.68) on risk/reward…downside risk $36 (BABA taxed 38% & 10% SOTP discount)…late yday, desk also saw unwinding to the YHOO stub trade (Long YHOO / Short BABA) that lifted BABA 1-2% after 3pm ET)…YHOO stock likely pops today after yday’s drop, but faster money likely fades the move near-term on (at the least) spin-off delay risks…with the stock nearing downside case of $36 (last $41.50), longer-term and patient investors likely to accumulate on weakness
    May 20, 2015. 11:01 AM | 1 Like Like |Link to Comment
  • Thoughts On Yahoo (And Alibaba) [View article]
    I'd like to add an important clarification to this article, before anyone comments on this: I'm *not* saying that Yahoo is "a dog".

    My point in the StockTalk (which was repurposed into this article) was to say that there's a difference between investing in great businesses for the long term, and investing in special situations with short-term catalysts. With the latter, you might be left holding something without long term growth prospects.

    I write that from painful experience. Years ago I took a large position (relative) in Hollywood Media (HOLL), which I thought would merge its MovieTickets.com business with Fandango, and take the combination public. That never happened, and HOLL has been a disaster of a stock every since. I still own too much of it :-(
    May 20, 2015. 09:19 AM | 1 Like Like |Link to Comment
  • Thoughts On Yahoo (And Alibaba) [View article]
    Chris,

    Thanks for the comment. I think if anything YHOO is now a more interesting opportunity than it was a few days ago. At least the stock isn't pricing in near-100% certainty that the spin-off will occur.

    And with your hedge fund's access to expert tax advisors, this is fertile investment territory for you.

    I'm just not sure that many of the individual investors who owned the stock understood the risk of a situation like this, and have the psychological tools to avoid "buy high, sell low" if it goes wrong.
    May 20, 2015. 09:13 AM | 2 Likes Like |Link to Comment
  • Why Facebook Should Buy Twitter [View article]
    Felix, Facebook only seems to buy companies which have one of these characteristics:

    (1) Extraordinary organic growth in users

    (2) Technology which can give Facebook a future competitive advantage

    Twitter fits neither of those.

    Note that "growth in users" means daily users, not monthly users, which is a bogus metric. See point 3 here: http://bit.ly/1AcTVjE
    May 5, 2015. 09:03 AM | 2 Likes Like |Link to Comment
  • Yahoo! Is Giving Itself Away [View article]
    Re. "I believe the stock is, in part, suffering from a particular form of female CEO hate that I have noticed somewhat afflicting other businesses, too."

    Agree. Turning around a tech company as large as Yahoo is *exceptionally* difficult. Much of the criticism of MM seems not to take that into account.
    Apr 29, 2015. 05:03 PM | Likes Like |Link to Comment
  • Yahoo! Is Giving Itself Away [View article]
    Alex, your long comment above was an excellent articulation of YHOO's current strategy, and the rationale for it.

    I think you're right: if YHOO is to have a future, it must be as a tech company. In that context, the hire of someone as talented as Marissa Mayer was the right bet by the board.

    Perhaps this is the real agency problem: Many investors don't need to care whether YHOO has a long term future. They just want to make money on the stock as fast as possible. So they care about the break-up value -- BABA, Yahoo Japan, and potential cash returned to investors or dividend payments for however long YHOO survives as a low-growth, low-expense company. If the sum of the parts exceeds the current stock price -- and is realized -- they're happy.

    But that's not the case for YHOO's employees, founders, and management, nor for growth investors. They care about YHOO succeeding, and believe they can restore the company to growth. So they're willing to take financial risks to make that happen. Even if it means raising YHOO's expenses, and thereby reducing its value as a short-term break-up play.

    So it all comes down to: What kind of investor are you?
    (1) If you're a value investor, like Chris, you are in conflict with YHOO's management and board. Every month they make non-accretive acquisitions and don't cut costs reduces the value of the sum-of-the-parts.
    (2) If you're a growth investor, and if you believe that MM will be able to restore YHOO to growth, you have no "agency problem".
    Apr 29, 2015. 04:58 PM | 3 Likes Like |Link to Comment
  • Twitter Earnings Preview: Will MAU Be Ignored Again? [View article]
    Feria Investor, two questions for you:

    (1) Is the key usage metric for Twitter monthly active users (MAUs), daily active users (DAUs), or the ratio of DAUs to MAUs? Your answer will depend on whether you think Twitter's goal is to be used more than once a month by its users. "The metric must be relevant to the intended use of your product. If your product is meant to be used daily, then something around Daily Active Users. Weekly, then weekly active users." (Source: http://bit.ly/1AcTVjE )

    Note: The most astonishing thing about FB is the number of daily users it has, and Facebook's ratio of DAUs to MAUs.

    (2) Although this article was released after TWTR earnings were released, it was written beforehand. The stock has been crushed after hours (down over 18%). What did you get wrong, and what changes would you make to your methodology going forward?
    Apr 28, 2015. 05:29 PM | 2 Likes Like |Link to Comment
  • Yahoo! Is Giving Itself Away [View article]
    Chris, on your (2), I suspect that if there's an agency problem, it's not just the CEO, it's the board.

    The YHOO board hired Marissa Mayer and awarded her the comp package you mentioned because their goal was to raise YHOO's organic growth rate. They were happy to pay up for that.

    Similarly, on the YHOO-AOL merger, neither the YHOO nor the AOL board seemed excited. See this excellent summary of YHOO's M&A history: http://bit.ly/1zjdL1G
    Apr 28, 2015. 07:56 AM | 6 Likes Like |Link to Comment
  • TheStreet: An Interesting Play Below $2 [View article]
    Charles Moscoe,

    Re. "I looked at The Deal and BoardEx assets and I think they overpaid for both."

    Can you expand on that please?
    Apr 28, 2015. 04:39 AM | Likes Like |Link to Comment
  • TheStreet: An Interesting Play Below $2 [View article]
    Alex Cho, you wrote: "Just look at... the nasty reviews on their subscription products."

    Can you provide a link please?
    Apr 28, 2015. 04:35 AM | Likes Like |Link to Comment
  • Yahoo! Is Giving Itself Away [View article]
    Thank you for the detailed answers, Chris.

    A thought re. "Why should something this big and this obvious be hidden in plain sight? Its size is pretty large for the price to be corrected by the typical aggregate position sizes of relative value arbitrage and event driven funds":

    From the articles and comments about YHOO on Seeking Alpha, it seems that the reason most people -- including retail investors -- own the stock is because of the value to be unlocked from BABA and Yahoo Japan. Few people at this point seem to be excited about Yahoo's organic opportunity. For example, see:
    http://seekingalpha.co...
    See also "How 'Not' Being Long Yahoo Is Now A Contrarian Idea": http://seekingalpha.co...

    And a follow up question:

    Re. "I think that a lot of things will happen at YHOO that this management is not planning." Can you expand on that please?
    Apr 28, 2015. 04:05 AM | 3 Likes Like |Link to Comment
  • Yahoo! Is Giving Itself Away [View article]
    Chris, a few questions for you:

    (1) How much of what you have written here is already priced into the stock? Yahoo has already announced the spin out of its BABA stake, and stated on its conf call that "we do prioritize maximizing the value of our Yahoo! Japan holdings for our shareholders. We have retained advisors to determine the most promising opportunities to maximize value". See mentions of "Japan" in the conf call transcript: http://seekingalpha.co...

    (2) If you view this as a financial restructuring story (spin out of BABA stock, sale of stake in Yahoo Japan), is it best to approach this as a pairs trade -- long YHOO, short BABA -- or as long-only YHOO?

    (3) You argue that YHOO has an opportunity to cut costs, proved by its low per employee metrics. And you state that the new VP HR, Bryan Powers, "knows a thing or two about hiring and firing the right personnel at a large tech company" from his experience at Square and Google. However, those companies grew headcount rapidly, and were not cost-cutting opportunities. Do you know of any hard evidence that YHOO is planning to cut its headcount? For example, anything that Marissa Mayer has said?

    (4) Given that the company has set a date for the BABA stake spinoff, and might move fast to spin off Yahoo Japan, would you want to hold this stock after those events have occurred?

    (5) Are there any risks to your thesis? For example, are you concerned that Yahoo might destroy shareholder value by making expensive acquisitions which don't generate long term shareholder value?
    Apr 27, 2015. 04:06 PM | 10 Likes Like |Link to Comment
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