Why Altaba Inc. Shares Rose 10.1% Last Month

What happened

Shares of Altaba (NASDAQ: AABA) gained 10.1% in May of 2018, according to data from S&P Global Market Intelligence. As always, the focused investment fund moved in near-perfect lockstep with its largest holding, Chinese e-commerce giant Alibaba (NYSE: BABA), whose shares rose 10.9% over the same period.

So what

As a reminder, Alibaba’s May gains were based on a strong fourth-quarter report. The company crushed Wall Street’s estimates across the board and outlined an ambitious plan for international growth in the long term. Since roughly 80% of Altaba’s investment portfolio is locked into its Alibaba shares, Altaba simply rode Alibaba’s coattails as usual.

Altaba enjoyed a solid Alibaba report. Image source: Alibaba.

Now what

The company formerly known as Yahoo! has been holding on to an Alibaba portfolio that was created long before that company hit the public markets in 2014, never buying more shares or selling a single stub. That is changing in May, as Altaba launched a tender offer to unload as much as 25% of its Alibaba holdings. The company aims to maximize the return on Alibaba for its shareholders, eventually giving it all away in the form of dividends and share buybacks.

Until that plan runs its course, Altaba remains an alternative method for investing in Alibaba on a fairly direct basis. If you like Alibaba’s chances of beating the market, Altaba should look good, too. It gets even better if you expect the company to eventually find a way to sidestep the tax implications of its hugely successful Alibaba investment. So it’s no surprise at all to see Altaba shares surging when Alibaba reported a great slate of fourth-quarter results.

10 stocks we like better than Altaba
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Altaba wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Anders Bylund owns shares of Alibaba Group Holding Ltd. The Motley Fool recommends Altaba Inc. The Motley Fool has a disclosure policy.

You May Also Like

About the Author: Over 50 Finance