Yahoo May Be A Nice Way To Participate In The Alibaba IPO
by Robert Wagner
One of the most highly anticipated IPOs is Alibaba, the Chinese equivalent of a wholesaler's Amazon (AMZN). Ever wonder where people get those HDMI cables that sell for $5.00 on AMZN? Or that must-have action figure of Psy, the South Korean rapper whose hit "Gangnam" style has taken the world by storm? You got it, Alibaba, the one-stop-shop for wholesalers. Yahoo (YHOO) purchased 40% of Alibaba back in 2005 for $1 billion. Just recently they sold half of their holdings for $7.6 billion. That works out to be a compounded rate of return of 47.5% before tax, and values Alibaba at around $38 billion. YHOO, being subject to a 40% tax rate, will keep $4.3 billion, and has promised to return that money to shareholders. Unfortunately, depending on how the IPO is executed, most people may not have access to the IPO. Terms and date of the IPO have yet to be released, but it is never too early to start planning. read more »
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