Yahoo! Inc. (NASDAQ:YHOO) shares are hitting multi-year highs. The street is rife with speculation that investors are selling other tech stocks to buy the Alibaba Group’s shares. Well, if that is true then the only exception would be Yahoo! Inc. (NASDAQ:YHOO) as the company is being seen by many on Street as a smarter way to buy a stake in the Alibaba Group. Yahoo! Inc. (NASDAQ:YHOO) owns more than 20% shares of the Alibaba Group and based on the valuation that the Street is putting on Alibaba, it seems that Yahoo! Inc. (NASDAQ:YHOO) is being valued for only the stake that it owns in the Alibaba Group. Jim Cramer believes that it’s not worth selling stocks of other high growth companies, just to buy shares in the Alibaba Group. He recently discussed about the ‘zero sum’ nature of the markets and the affect that the Alibaba Group’s IPO will have on the overall market, on CNBC.
“You have got this market where some pockets are good, but there are a lot of companies, they are just doing okay and I don’t want to see the big high growth stocks be sold just to get Alibaba, because then the money is not going to come back. There is not a lot of money coming in. There still isn’t the interest that I was expecting, given the averages, it’s tepid,” Cramer said.
Cramer feels that the markets are currently a “zero sum” game i.e. there is not much money coming in the capital markets and whatever transactions are taking place are happening because investors are selling one stock to buy another. He feels that the market is focusing only on the Alibaba group and Yahoo! Inc. (NASDAQ:YHOO) right now, while other stocks have taken a backseat. He feels that if Fed starts tightening the interest rates and money flow remains low, as it is now, investors are going to be in a dilemma of whether to invest in high growth stocks or not.
As of June 30, 2014, D.E. Shaw’s firm D.E. Shaw owns over 16 million shares of Yahoo! Inc. (NASDAQ:YHOO).