Yahoo is now a Strong Buy with a Strong Precaution
News has hit today of a Compromise that increases Yahoo's board to 11 members in which 1 is Carl Ichan, 2 are Carl's handpicked choice out of his 9 or so selected individuals.
This is a complete mess. Shareholders are going to rebel in *fear* from this news.
They were expecting something else. This is not even fathomable as to what this even means.
I like the compromise.
Here's how I see things:
1) Yahoo's stock falls back into the Teens.. around 19 maybe even as low as 18 a share. Due to investor confusion and fear over what looks like a mess. Increased Bueracracy is NOT what shareholders were looking for. So? Now we have a buying opportunity!
2) Outside of Advertising Revenue which is slipping, Yahoo's company is getting devalued at an annual basis. Not good.
3) Carl Ichan may be inexperienced and not knowledgeable with Internet Technology and Networking Technology.... But, he's invested a large capital into Yahoo and if there's 1 thing we all know about Carl is that he's not the most *patient* when it comes to turn-a-round plans. Carl will seek change in the company and soon.
What has happened here is that Carl's foot is in the door without a shareholder fight.
I really don't see this as a TOKEN effort where CARL and his pals are just TOKENs with only 3 votes versus Jerry's group of 8 votes.
This type of compromise does leave the door open for other future compromises.
Ultimately, I don't think shareholders have much confidence with Jerry as a leader. I think impatience is setting in with investors who are LONG on this stock.
So.. let the short sellers sell off the stock for the next 3 months.... Tolerate and stomache the action.....
Cause I see 2009 as a good year where YAHOO finally gets a deal done with someone AOL, MICROSOFT, GOOGLE, whatever. It is clear to me that if YAHOO wasn't worth investing in how come so many companies see otherwise? So many companies have sought YAHOO out for deals.
Carl ICHAN may not know the internet business.... But does that matter? Jerry Yang's group knows the internet business and Carl knows where there is growth potential in a deal and where there isn't.
The main thing to look at is to ask yourself what you think YAHOO as a company will look like 12 months from now. If you can stick it out for 12 months, I don't think you'll be disappointed.
I think 12 months from now shareholders will finally see where YAHOO is headed and the beginning of a transformation period will take effect. Transformations tend to result in huge price valuations and I am pretty sure CARL + JERRY aren't going to transform their company into something undesirable.
YAHOO (IS) desired by a lot of companies right now. So... CARL and JERRY can sit around looking at all of the options that have been put on the table and future options and really really work towards Shareholder Value.
This type of situation is the kind of situation where it makes sense to invest in YAHOO and go long.
Truth is.. I am thinking of dumping my Fertilizer Stock (some of it) and going long on YAHOO right now. I'll announce when and if I do that.