Altaba (ticker: AABA) disclosed the completion of the buyback program in its annual report, released late Monday. The company is scheduled to provide a strategic and financial presentation on Tuesday at 8:30 am EST.
There also was a sharp drop in the company's deferred tax liabilities to $15.7 billion on December 31st from $27.7 billion on September 30th due to the reduction in the corporate tax rate.
CEO Thomas McInerney is expected to discuss Altaba’s plans for the company’s stakes in Alibaba Group Holding (BABA) and Yahoo Japan (4689.Japan). This will mark the first public investor presentation by the company since Altaba sold its core Internet business to Verizon Communications(VZ) last June and became a closed-end investment company.
Altaba shares finished Monday at $78.08, up $0.32, and trade at a 26% discount to the company’s net asset value, calculated on Altaba’s website. Altaba had repurchased $3.3 billion of the $5 billion authorized buyback as of Nov. 16, 2017, and repurchased a further $1.7 billion by the end of 2017. Altaba’s board authorized a new $5 billion buyback program earlier this month.
Altaba’s two largest assets are its 15% stake in Alibaba – some 384 million shares – worth $74 billion, and a roughly 35% stake in Yahoo Japan worth $10 billion. Altaba said in the annual report that it plans to sell the Yahoo Japan stake “over time.” The company’s major decision concerns the Alibaba stake.
Barron’s has written favorably on Altaba as a cheap way to play Alibaba because of the large discount to NAV. Bulls argue the discount should be narrower than 26% and closer to the current corporate tax rate of 21%. If Altaba liquidated the Alibaba and Yahoo Japan stakes, it would be subject to taxes on the bulk of the proceeds.
The company ended 2017 with $4.3 billion in cash and equivalents and nearly $3 billion in net cash, reflecting $1.4 billion of convertible debt.
