At the start of the year, it wasn't an entirely obvious play. Going into 2013, Yahoo! was trading around $20 -- up from $14 when Marissa Mayer was hired as CEO six months earlier and up from $11 about 18 months before when activist investor Dan Loeb first built a position in the company.
There were many market observers who said the "easy money had been made" in Yahoo!.
Then, midway through the year, Dan Loeb surprised everyone by leaving the Yahoo! board and reduced the size of his position in the company by two-thirds when the stock price was $29. The howls from observers was that anyone else holding Yahoo!'s stock was "dumb money." These observers instructed people to immediately sell Yahoo! or risk being a bag holder. It turned out to be laughably bad advice.
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Through it all, I suggested that you should stay long Yahoo!. Why?
Ever since I first went long on the stock three years ago I noticed most market observers, when they looked at Yahoo!, only considered the "core business." No one seemed to pay much attention to the Asian assets -- Yahoo!'s investments in Yahoo! Japan and Alibaba.
Because of this bias towards the American part of Yahoo!, most observers tended to think the stock was destined for failure.
I recall meeting in mid-2012 with a portfolio manager who was well respected at the time and explained my thesis on why I liked Yahoo! stock. He cut me off 30 seconds in, saying, "Yahoo!? Are you kidding me? Yahoo!'s a dinosaur. I haven't been on the site in like 10 years."