Did Yahoo start their $3 billion buyback yet or are they up over 12% since hotmodel said Yahoo was dead money one month ago at $15.80 on the buys of Einhorn, Tiger Capital and Dan Loeb?
Yahoo announced a $3 billion buyback in 2010 after their old buyback ran out and a new $5 billion buyback in May 2012. Yahoo has spent a few billion on buybacks since the 2010 announcement and that continues. Yahoo started buying under their current $5 billion buyback plan 6 months ago.
Yahoo had a buyback plan in place when Yahoo hit $18 in 2008, 2009, 2010, 2011 and now in 2012. Just like they had a buyback plan in place when Yahoo hit the 14s in 2008, 2009, 2010, 2011 and 2012.
According to Eric Jackson, In Yahoo's 10-Q, from October 1 through November 8, Yahoo repurchased 13 million shares of its stock at an average price of $16.87 for a total of $212 million.
That’s a good amount, but I was thinking it would be possible for Yahoo! to repurchase all the $3 billion of stock in the 4th quarter. They will have to really step on the gas to accomplish that so soon. It likely won’t happen.
Most of the buying that’s gone on in the stock has been coming from real institutional investors buying in to the stock in a big way. Einhorn, Tiger Capital and Dan Loeb bought 32 million shares.
If the stock’s reacted this well so far, imagine how it will respond when Yahoo really starts buying back its stock in larger numbers to reduce the share count?
Just for most peoples information the most a company can buy in one day is about 3 to 5 percent of what is traded that day. Any more and the stock would spike. Buying back stock is a long and complicated process especially when you are trading a stock that is now in the cross hairs of a lot of big investors. I think the most Yahoo can do daily is about 1 to 1.5 million shares on a good day. So if they were attempting to buy back it would take them over 100 to 150 trading days. This is just how it works. But it is a positive thing that the stock has gone up so well and Yahoo has just begun its venture.
Sentiment: Strong Buy
My dear friends:
You are looking at things very simplistically. YHOO will never spend that amount to buy back the shares. Remember when they buy, someone is selling.
YHOO did what was needed to buy back the shares. If pushing up the shares was so easy, AAPL and MSFT and CSCO which have tons of cash would not let their shares to drop and would use their money to push their stocks up. Also remember the employees also get stock options which they excecise regulary which also dilutes the number of shares.