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The Thesis
Loeb recognized that Yahoo's Alibaba stake alone was worth more than Yahoo's entire market cap, waged a successful activist campaign to install new management, and unlocked the hidden value.
The Story
Dan Loeb's Third Point acquired a major stake in Yahoo starting in 2011, recognizing an extraordinary sum-of-the-parts opportunity: Yahoo's stakes in Alibaba and Yahoo Japan were worth more than Yahoo's entire market capitalization, meaning investors were getting Yahoo's core business for free — or less. Loeb launched an activist campaign, publicly criticizing management and demanding board seats.
His campaign succeeded. Third Point won board seats, helped install Marissa Mayer as CEO, and began the process of unlocking the hidden asset value. As Alibaba surged ahead of its historic 2014 IPO, Yahoo's stock more than doubled. Loeb's Third Point earned over $1 billion on the investment, proving that activist investing at its best creates value by forcing companies to recognize what they already own.
Key Insight
Sometimes the best investment is a company that doesn't realize what it's worth — activist investors can create value simply by shining a light on hidden assets.
“Our goal is to unlock value that's already there.”
Dan Loeb
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