A vocal investor in Yahoo Inc (YHOO.O) and Viacom Inc (VIAB.O) is calling for the boards of both companies to seek outside investments from strategic partners in the vein of legendary investor Warren Buffett to help boost the value of their stocks.
In an article reviewed by Reuters that is to be published on the Internet on Thursday, New York-based SpringOwl Asset Management managing director Eric Jackson said Yahoo and Viacom would benefit from outside investment, and pointed to Goldman Sachs Group Inc's (GS.N) weathering the financial crisis after taking on a $5 billion investment from Warren Buffett in 2008.
SpringOwl holds undisclosed stakes in Yahoo and Viacom.
"Although some shareholders of both Yahoo and Viacom think that a simple sale or break-up of both companies is the best way to create value for shareholders, we believe that both companies could benefit from their own version of the "Buffett Convert," Jackson said.
Jackson said that while the stakes of investors would be diluted if an outside investor stepped in, "they would still be better off because their shares would likely get re-rated upwards substantially with this new partner sitting around the board table."
Yahoo and Viacom declined to comment.
Both Yahoo and Viacom have become targets of activist shareholders.
Yahoo has been under pressure to separate its Asian assets and auction off its core business. Its shares have fallen about 40 percent over the last year.
Viacom is the subject of a lawsuit claiming that its executive chairman, Sumner Redstone, is incapacitated.
According to Jackson, Yahoo should turn to Liberty Media Corp (LMCA.O), whose chairman John Malone is a whiz at finding tax efficiencies, or telecommunications companies Verizon (VZ.N) or AT&T (T.N), which could also bring traffic to Yahoo's properties.
For Viacom, it could benefit from investment and insight from China's Alibaba (BABA.N), Amazon (AMZN.O) or AMC Entertainment holdings, he said. Jackson has previously suggested that Viacom consider a merger with AMC.
Jackson added that Paramount, the movie studio owned by Viacom, could become more valuable to investors if Amazon, Alibaba, Apple or Google invested.
(Reporting by Liana B. Baker in New York; Editing by Leslie Adler)
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Updated Date: Jan 28, 2016 07:15 AM