5 ms·

Adjusted for inflation, $8.2 billion in 2016 dollars.

by dchest 10y ago

jonknee 10y ago
Adjusted for stock returns (since it was an all stock deal), $1.3b. And that includes the huge Alibaba stake that is most of Yahoo's value, if that deal never happened and Yahoo was just what Verizon bought the total would be ~$169m. Mark was smart and bought puts to protect his stake and then sold it so that he wasn't tied to Yahoo. In retrospect he was really smart.
- beagle3 10y ago
  > Mark was smart and bought puts to protect his stake and then sold it so that he wasn't tied to Yahoo. In retrospect he was really smart. Also questionably legal. There's this little thing called SEC Rule 144 [0], which forbids this kind of action (attempting to preempt pump-and-dump IPOs and mergers). I have no knowledge of the specific details involved, but I find it unlikely that Cuban was not subject to Rule 144 - especially since you say "bought puts to protect his stake", which indicates he couldn't sell Yahoo shares at the time, and thus was almost surely subject to said rule. SEC enforcement was a joke (and possibly still is), but illegal actions are only ever smart in retrospect, post "statute of limitations". [0] https://www.sec.gov/investor/pubs/rule144.htm https://www.sec.gov/investor/pubs/rule144.htm
  - djhn 10y ago
    This is (afaik) a good description of his trade: http://investmentxyz.blogspot.fi/2006/05/cubans-collar-anatomy-of-famous-trade.html http://investmentxyz.blogspot.fi/2006/05/cubans-collar-anato... I'm not familiar enough with the SEC rules to add anything to your comment, other than it's the first time I hear this and it's.. interesting?
  - jonknee 10y ago
    Using options to smooth volatility is a common technique after M&A and was likely done for him by the same bankers that made the original acquisition. I am sure it was on the up and up.
    - beagle3 10y ago
      SEC enforcement was a joke for years, probably still is. A lot of people are doing this, so, yes it is a common technique, and no, it's not ok - it runs afoul of SEC Rule 144. No action or inquiry from the SEC is a bet that a lot of people are willing to take, and it pays well for most of them. So does lying to the IRS. Personally, I prefer to pay more taxes, and lose some income (I wanted to protect a 5X exit from downside using puts, and my tax/legal guy warned me against it and introduced me to 144. I ended up with a 1.1X return - I've lost 98% of the profit because the buyer's shares dropped 5 months after the purchase for a reason unrelated to the 5X exit I was a part of. Sums weren't life changing either way, in case you wonder).

Adjusted for inflation, $8.2 billion in 2016 dollars.

by dchest 10y ago

Adjusted for inflation, $8.2 billion in 2016 dollars.

Adjusted for stock returns (since it was an all stock deal), $1.3b. And that includes the huge Alibaba stake that is most of Yahoo's value, if that deal never happened and Yahoo was just what Verizon bought the total would be ~$169m. Mark was smart and bought puts to protect his stake and then sold it so that he wasn't tied to Yahoo. In retrospect he was really smart.

beagle3 10y ago
> Mark was smart and bought puts to protect his stake and then sold it so that he wasn't tied to Yahoo. In retrospect he was really smart. Also questionably legal. There's this little thing called SEC Rule 144 [0], which forbids this kind of action (attempting to preempt pump-and-dump IPOs and mergers). I have no knowledge of the specific details involved, but I find it unlikely that Cuban was not subject to Rule 144 - especially since you say "bought puts to protect his stake", which indicates he couldn't sell Yahoo shares at the time, and thus was almost surely subject to said rule. SEC enforcement was a joke (and possibly still is), but illegal actions are only ever smart in retrospect, post "statute of limitations". [0] https://www.sec.gov/investor/pubs/rule144.htm https://www.sec.gov/investor/pubs/rule144.htm
- djhn 10y ago
  This is (afaik) a good description of his trade: http://investmentxyz.blogspot.fi/2006/05/cubans-collar-anatomy-of-famous-trade.html http://investmentxyz.blogspot.fi/2006/05/cubans-collar-anato... I'm not familiar enough with the SEC rules to add anything to your comment, other than it's the first time I hear this and it's.. interesting?
- jonknee 10y ago
  Using options to smooth volatility is a common technique after M&A and was likely done for him by the same bankers that made the original acquisition. I am sure it was on the up and up.
  - beagle3 10y ago
    SEC enforcement was a joke for years, probably still is. A lot of people are doing this, so, yes it is a common technique, and no, it's not ok - it runs afoul of SEC Rule 144. No action or inquiry from the SEC is a bet that a lot of people are willing to take, and it pays well for most of them. So does lying to the IRS. Personally, I prefer to pay more taxes, and lose some income (I wanted to protect a 5X exit from downside using puts, and my tax/legal guy warned me against it and introduced me to 144. I ended up with a 1.1X return - I've lost 98% of the profit because the buyer's shares dropped 5 months after the purchase for a reason unrelated to the 5X exit I was a part of. Sums weren't life changing either way, in case you wonder).