Dan Loeb/Third POint/Yahoo Director Sells 11 Million Shares
While the initial response to last week's YHOO earnings was afterhours euphoria all of which fizzled in the first hours of trading, sentiment on the firm which has yet to do more than merely promise may sour in the coming days even more following news late on Friday that the company's formerly staunchest advocate, Third Point's Dan Loeb sold some 15% of his stake, or 11 million of 73 million shares on Thursday and Friday at a price between $19.68 and $19.70. The remaining stake is now 62 million shares, which means Third Point is no longer the firm's largest institutional holder with a 6.17% stake, but drops to 4th place behind Capital Group and above Vanguard, who own 67 and 48.9 million shares respectively. The reason given for these opportunistic sales is that they were "motivated by Third Point`s desire to maintain a roughly consistent percentage holding of Yahoo`s outstanding shares as the company pursues its $5 billion buy-back authorization." Of course considering the $1.5 billion in shares that YHOO has actually bought back represent some 6.5% of the outstanding, one is a little confused how a 15% stake reduction is hedged relative to an actual buyback that is some 60% smaller. Does this mean another 15% stake cut in Q1 when YHOO, supposedly, buys back another $1.5 billion?
Being a skeptic by nature, I believe it is likely the Board is looking to buy more stock when, and if, Capital Group and Vanguard also dump shares. Under the assumption that Loeb's reason to dump stock is legitimate (?) then possibly the other major shareholder's will dump which would put the price a good bit lower, say $17.
Or Blackrock could be buying Fund shares so that the funds can get out all at once. Blackrock would have a counter trade in place and then slowly liquidate the Yahoo shares it owns so as not to disrupt the market. Making a few pennies on each share is a lot of money.