Altaba's Insights Into Alibaba And Yahoo Japan

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About: Altaba, Inc. (AABA), Includes: BABA, YAHOF
by: Edgar Torres H
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Edgar Torres H
Long/short equity, special situations, event-driven, momentum
Summary

I break down Altaba's asset composition.

Then I value AABA as a function of the estimates of fair value of BABA and YAHOF, plus the remaining assets in the balance sheet, net the potential taxes.

From the analysis, it appears BABA is undervalued by approximately 8%.

However, at first sight, YAHOF appears to be the most undervalued asset. I concede that further analysis is required to declare it a value investment, but it seems like the stock holds a potential 89% upside.

It appears the market is pricing AABA like it's going to pay all the potential taxes in BABA and YAHOF. However, it's likely the company will be able to reduce the effective tax rate, which should translate into additional profits for shareholders.

Altaba, Inc. (NASDAQ: AABA) is the company resulting from the Yahoo spinoff to Verizon (NYSE: VZ). The company now is an investment firm, and its primary holdings are Alibaba (NASDAQ: BABA) and