…and who could blame them for walking away?
Greenlight Capital had bought into Yahoo ($YHOO) recently, to much media fanfare. Shortly after, the theft of the Alibaba subsidiary was made public and the smart money said “no thanks” to the whole clusterf*ck.
Here’s David Einhorn in Greenlight Capital‘s just-released Q2 Client Letter:
The Partnerships bought Yahoo! (YHOO) earlier this year based on a sum of the parts analysis, which included putting substantial value on its Chinese assets. Shortly after the purchase, the value of the Chinese assets came into doubt as the CEO of the Chinese unit hived-off a valuable subsidiary into a corporation that he personally controls. From there, the finger pointing started going in every direction. This wasn’t what we signed up for. We exited with a modest loss.