Several Fidelity mutual funds cut their positions in Yahoo Inc.(YHOO) in February, before Alibaba Group Holding Ltd. decided to start the process of listing on a U.S. stock exchange, according to the most recent data provided by Morningstar.
Yahoo owns a 24% stake in the fast-growing Chinese e-commerce giant, accounting for more than half of Yahoo’s market value, analysts have estimated. Much of the run-up in Yahoo’s stock price during CEO Marissa Mayer‘s nearly two-year tenure has been tied to investor excitement about Alibaba’s prospects. An Alibaba IPO, expected later this year, could raise about $15 billion from investors.
Fidelity’s Contrafund sold 4.1 million Yahoo shares from Jan. 31 through Feb. 28, Morningstar data show. The move cut its Yahoo position by 11%. A total of 11 Fidelity funds sold more than 13 million Yahoo shares over that time frame, or a little more than 1% of the company’s total shares outstanding.
A Fidelity spokesman declined comment, saying the fund company doesn’t speak about specific stocks. A Yahoo spokesperson wasn’t immediately available for comment.
Yahoo shares recently dropped 0.2% to $36.32. The stock is up 55% over the past 12 months. It peaked in January at $41.72 before tumbling into the mid $30s in early February. Shares have largely fluctuated between $35 and $40 ever since.
Alibaba said March 16 that it was moving to begin the process of listing on an exchange in New York, in what could be one of the largest Internet initial public offerings in history. In a brief statement posted in its website, Alibaba said a U.S. IPO would “make us a more global company and enhance the company’s transparency.”
Last Wednesday the stock jumped 6.3% after Yahoo reported its revenue, minus commission paid to partners for Web traffic, rose 1% in the first quarter after four straight quarters without growth. Investor optimism was buoyed by better-than-expected results at Alibaba Group. Yahoo said Alibaba’s revenue jumped 66%, a figure that allayed investor concerns about potentially slowing growth at Alibaba.
After getting a glimpse into Alibaba’s quarterly figures, Bernstein Research slapped a $245 billion valuation on the company. Such a figure would make Alibaba the ninth biggest U.S.-listed company in the S&P 500.
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