This blog is a forum for expressing my thoughts, ideas, and opinions, but is never intended to provide advice of any kind, financial or otherwise. Comments are welcome. I will read them all, but due to timing and other constraints, I might not be able to respond to each one. Thanks for understanding.
According to Sun-Tze’s Art of War 孫子兵法, a military commander must pay close attention to the clues exhibited by enemy troops. For instance, an enemy soldier who leans on a pole for support is hungry. A soldier who drinks first when fetching water for others is thirsty. Troops that fail to take an obvious advantage of a situation are exhausted.
We can apply the same principles to the battlefield of stock investments. For example, interpreting corporate events can lead to insights about company performance, without being an insider. Why did co-founder Jerry Yang resign in such a hurry from Yahoo’s board and from all other positions he held at the company? A decision as important as this one would not have been hastily made – there must having been imminent events that Jerry knew were about to occur. What could he be running from?
There has been buzz for quite some time now that a group of investors, led by Jack Ma, the CEO of Alibaba in China, is interested in buying Yahoo . And Microsoft’s interest in acquiring Yahoo is no secret, notwithstanding its past failure to do so.
Steve Ballmer, the CEO of Microsoft, and Jerry Yang, had butt heads in a failed merger not too long ago. Perhaps Jerry Yang’s swift exit from Yahoo allows both men to save face in light of a potential attempt to rekindle acquisition negotiations.
Since Jack Ma’s group may submit a competitive bid, Jerry Yang’s association with Alibaba may complicate things along the way. Because Jerry Yang was previously blamed for refusing Microsoft’s bid for Yahoo, he would likely want to steer clear of any involvement if the merger fails for the second time. Since Microsoft offered to buy Yahoo at $31 per share in February 2008, Microsoft may once again offer somewhere in the mid-$20 range. This allows Steve Ballmer to claim victory and foresight, while allowing Jerry Yang to emerge unscathed because he did not influence the deal. And if Jack Ma’s investors now enter the arena, the share price will likely go up further.
If in fact these speculations represent the undertow of Jerry Yang’s resignation, then it is quite possible that Yahoo’s** stock will quickly spike up in the immediate future. I, for one, plan to take advantage of this unique opportunity. Even if my deductions are wrong, there isn’t much downside, especially if the economy is improving steadily.
What do you think of my prediction? Do you think it’s possible to gain insight about stock prices based on the activities of a corporation and its senior leadership?
** I currently hold equity positions in Yahoo.