Yahoo! Inc. (NASDAQ:YHOO)’s stock price will peak at the Alibaba Group initial public offering, Michael Khouw said in a discussion on CNBC drawing from data on options taken out by investors on the stock.
Yahoo! Inc. (NASDAQ:YHOO) has a very substantial stake in the Alibaba Group: 22.5% or about 524 million shares according to page 228 of the Alibaba Group’s recent F-1 filing with the U.S. Securities and Exchange Commission. The Alibaba Group is expected to debut at the New York Stock Exchange this month.
According to Khouw who is a CNBC correspondent and the managing director and primary strategist at Dash Financial, investors are betting that Yahoo! Inc. (NASDAQ:YHOO) will ride the wave of the Alibaba Group listing.
Khouw said that Yahoo! Inc. (NASDAQ:YHOO) recently traded at twice its average daily call volume. He noted that a lot of sells of September 43-strike calls were made for $0.90.
This means, he said, that traders see the company below $42 through the September expiration of those options. The call options will be expiring right about the same time of the Alibaba Group initial public offering, Khouw said.
David E. Shaw’s eponymous D E Shaw reported about 16.19 million shares in Yahoo! Inc. (NASDAQ:YHOO) by the end of the second quarter of this year. This stake was valued at about $568.85 million when the report to the U.S. Securities and Exchange Commission was made by the hedge fund. D E Shaw’s stake in the internet company is 0.77% of their whole portfolio. The firm’s largest investment is with Apple Inc. (NASDAQ:AAPL) in which the hedge fund reported about 11.89 million shares, a stake that was worth about $1.1 billion, by the end of the second quarter.