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Activist Hedge Fund Tackles Yahoo

yahoo-logo (1)New York (HedgeCo.Net) – New York-based activist hedge fund Starboard Value LP has sent a letter to Yahoo CEO Marissa Mayer and Yahoo’s Board of Directors. The hedge fund has an estimated $1 billion in assets and was founded by Jeffrey Smith in 2002 via a spin-off from Ramius.

“We are pleased that Yahoo has announced its intention to execute a tax-free spin-off of its stake in Alibaba.” Smith said in the letter. “We believe that the separation of this valuable asset is a good first step towards creating significant value for the benefit of all Yahoo shareholders. However, we continue to believe that there are other opportunities to create value, highlighted in our previous letters and communications with you, which management and the Board of Directors should also commit to execute.”

Highlights from the letter include:

  • Starboard Believes They Can Can Unlock $11.1 Billion of Shareholder Value, or approximately $11.70 per Share
  • Right-Sizing the Company’s Bloated Cost Structure
  • Exploring Opportunities to Monetize Yahoo’s Intellectual Property and Real Estate Assets
  • Separating Yahoo! Japan Stake in a Tax-Efficient Manner
  • Returning $3.5-$4.0 Billion of Excess Cash to Shareholders through Share Repurchases

“Yahoo needs a plan that includes improved focus on businesses where Yahoo has a competitive advantage, substantial cost reductions, a tax efficient separation of Yahoo! Japan, and aggressive share repurchases funded with excess cash on the balance sheet and capital tied up in intellectual property and real estate assets.  We look forward to continuing our discussions.” Starboard concluded.

Starboard Value is a fundamental oriented activist hedge fund focusing on small cap stocks. Starboard Value LP is estimated to have assets under management in excess of $1 billion.

Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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