Is Yahoo! Inc. (YHOO) A Good Stock To Buy Right Now? James Dinan, George Soros Agree


Yahoo! Inc. (NASDAQ:YHOO) shareholders have been riding Alibaba’s wave for a while now. The stock has been getting some love from the hedge fund community as well. It was in 94 hedge funds’ portfolio at the end of the third quarter of 2014. YHOO has experienced an increase in hedge fund interest lately. There were 79 hedge funds in our database with YHOO holdings at the end of June.

Should you pay attention to hedge fund moves in general? While there are greater than 8000 funds with their doors open at the moment, experts at Insider Monkey, a website specializing in hedge funds, look at the aristocrats of this group, approximately 700 funds. By shadowing hedge funds picks, Insider Monkey has come up with various investment strategies that have historically outclassed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 18 percentage points a year for a decade in their back tests. This strategy has been performing better in forward tests as well. Since August 2012, its stock picks returned a cumulative 101% vs. 51.5% for the S&P 500 ETF (SPY).

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With all of this in mind, let’s take a gander at the new action surrounding Yahoo! Inc. (NASDAQ:YHOO).

How are hedge funds trading Yahoo! Inc. (NASDAQ:YHOO)?

At the end of the third quarter, a total of 94 of the hedge funds tracked by Insider Monkey were long in this stock, a change of 19% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully.

Of the funds tracked by Insider Monkey, D E Shaw holds the largest position in Yahoo! Inc. (NASDAQ:YHOO). The quant shop has a $797.3 million position in the stock, comprising 1% of its 13F portfolio. The second most bullish hedge fund manager is York Capital Management, managed by James Dinan, which held a $400.6 million call position; 4.1% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include John Thaler’s JAT Capital Management, Jeffrey Smith’s Starboard Value LP and Rob Citrone’s Discovery Capital Management.

George Soros, Christian Leone, and Farallon Capital are among the hedge funds that initiated brand new positions in Yahoo! Inc. (NASDAQ:YHOO) during the third quarter as well. Yahoo is now one of the top 25 stocks among hedge funds.

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