Is Alternative Alibaba, Altaba (NASDAQ:AABA) a Buy or a Sell?

Altaba Inc. (NASDAQ:AABA) is a closed-end management investment company offering equity, debt and cash investments to U.S. customers. It’s main assets are a 15% equity interest in Alibaba Group Holding Ltd. (NYSE:BABA) and 36% in Yahoo Japan Corp. In the past 3-months and 6-months, the company stock price has increased 9.45% and 38.4% respectively peaking to its 52-week high levels during the same period.

In the past 3-months, Altaba has outperformed Alibaba stock (2.09%) in expectation of additional potential tax benefits as U.S. politics are currently focusing on sweeping tax reforms. On the other hand, Yahoo Japan has lost market value over the same time period.

On the whole, institutions own 82.2% or $51.7 million of AABA shares. Almost 120 filers have AABA in their top 10, a few of them being – TCI Fund Management Ltd, Canyon Capital Advisors LLC and Millenium Management LLC. Bank of America recently added 20.4 million shares to its positon, bringing its holding to 49 million shares.

On the trading front, new and sold positions in AABA have led to a 1.84 million shares net increase. Meanwhile, active, holding and declining positions in the latest quarter indicated a overall net increase in ownership of 2.93 million shares suggesting bullish sentiment among institutions.

Steven Cohen’s Fund Point72 Asset Management which was our recent coverage has recently bought AABA leading to 1.81% of its total portfolio or 6.1 million shares, it now is on of top five holdings in the fund.

Looking at Altaba financials, cash stands strong at $362,000 as of the September quarter compared to $100,000 in June quarter. Net assets have also increased to $55.1 billion from $48.3 billion, while NAV per share rose to $63.13 from $53.96.

In its recent filing, AABA Board of Directors approved a share repurchase program allowing it to buyback $5 billion in shares indicating its belief of shares being undervalued currently.

AABA has its investment in China’s e-commerce industry which is currently growing significantly showing 26.3% growth to $764.8 billion in online retail sales in 2016 compared to prior year. Competing against the only difficulty of poor offline infrastructure, mobile e-commerce sales are expected to touch a record $1 trillion. On par with changing industry trends, Alibaba recently announced the launch of “More Mall”, a space which merges the e-commerce and mall shopping experience together. It has also forayed into the home decor industry with its store Home Times which helps customers to digitally shop. Similarly, through investments it is also exploring to operate a supermarket chain, two major Chinese department stores and a international brand looking to improve its China business, in the same model.

With a market share of 8.9%, Yahoo! Japan ranks third in the e-commerce space which still has substantial scope for growth. This will further provide a strong foothold to AABA investment as 15% of Yahoo Japan revenue is generated through e-commerce. Number of shoppers are expected to increase to 89 million by 2021 while the B2C industry is estimated to grow to $112 billion, according to eshopworld.