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Altaba Begins Sale of Remaining Stake in Alibaba (1/14/20)

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Enterprising Investor Member Level  Tuesday, 01/14/20 11:55:33 PM
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Altaba Begins Sale of Remaining Stake in Alibaba (1/14/20)

By Andrew Bary

Altaba, a longtime holder of Alibaba Group Holding, has begun selling its remaining stake of five million shares in the Chinese e-commerce giant and expects to complete the sale of the entire holding in the coming days, according to a securities filing.

Altaba, which adopted a plan of liquidation last year, sold a million shares of Alibaba (ticker: BABA) on Monday at $229 a share for proceeds of $229 million. Altaba, which is organized as a closed-end fund, plans to provide daily updates on its website.

Altaba is taking advantage of gains in Alibaba stock, which has risen 35% since the end of September. The sale of its Alibaba stock could indicate that Altaba management, led by CEO Thomas McInerney, thinks this is a good time to unload the remaining stake. Altaba declined to comment on the sale.

On Tuesday, however, shares of Alibaba shares were down 1.6%, at $226.76.

Altaba stock was delisted from the Nasdaq in early October, when it filed a plan of liquidation in Delaware and the last sale was at $19.63. The shares have advanced since then in over-the-counter trading and changed hands on Monday around $21.50, according to one investor.

There is no listed market or ticker symbol now for Altaba, which has said it plans to make an initial distribution to investors in the fourth quarter of this year.

The most recent Altaba net asset value, for Sept. 30, was $23.08 a share. The current discount to net asset value reflects uncertainty about the timing liquidation payments and tax issues.

Individual investors have found it difficult or impossible to sell their Altaba stock since the delisting, and brokerage firms often show no carrying value for Altaba on client statements. This has made some investors mistakenly think that Altaba is worthless. The current over-the-counter market in Altaba is dominated by institutions.

Altaba is the former Yahoo!, which changed its name to Altaba in June 2017 after it sold its internet business to Verizon Communications (VZ). At the time, Altaba’s main asset was a 15% stake in Alibaba, some 384 million shares, which it obtained more than a decade earlier. Altaba has sold down that big stake and was left with five million shares when it moved to formally liquidate. The small stake was held for tax-planning purposes.


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