I was going to post this idea Friday morning, but then a Reuters scoop significantly affected the share prices. The trade is now slightly less attractive, but readers may still find the commentary useful The current market price of SOGO implies a high likelihood that its $9/ADS acquisition by Tencent will be successful while the … Continue reading Long SOHU Short SOGO
Sohu will receive $1,179mm in cash ($30/SOHU) from Tencent's privatization of Sogou, their jointly controlled search and AI business (LINK). Sohu's Changyou gaming business could easily demonstrate value of $57/SOHU through a 2021 listing in Hong Kong or China. Sohu's media business (news and video) continues to lose money and along with corporate overhead may … Continue reading Sohu will get $30/share from Sogou and Changyou is worth even more
Sohu offered $10/ADS to buy out the 33% public stake in its Changyou gaming business Release of a new mobile game from its hit TLBB series could boost Changyou's 2020 earnings to $150mm (about $3/ADS) Sohu should report a substantial 2020 profit after 8 years of losses. Changyou will be strong, Sogou will continue to … Continue reading Changyou Will Deliver Strong Results For Sohu In 2020
Sohu's 20-F revealed that the company no longer believes it will owe any special one-time tax in connection with the 2017 US Tax Reform. If correct then this will free up $144mm of cash (about $3.69/ADS) for general corporate purposes. Investors in Changyou and Sohu are frustrated by the lack of information about the status … Continue reading Sohu 20-F Reveals $144mm Tax Benefit
Changyou's recently distributed special dividend and Sohu's pending liquidation may be intended to facilitate a new buyout offer for Changyou. Fair value for a transaction should be at least $29.74/ADS. Some additional background was in my prior articles: Changyou’s Buyout Price Should be Raised to at least $53 Sohu Valuation enhanced by successful Sogou IPO and … Continue reading What’s next after the Changyou dividend and Sohu liquidation?
Successful IPO of the Sogou search business clarifies the $1.5Bn value of Sohu's retained 33% stake ($39/share of SOHU) Possible privatization of the Changyou gaming business would deliver $1.4Bn of net cash before tax ($35/share of SOHU) at the unfair preliminary offer price or $1.8-3.2Bn ($45-$82/Share of SOHU) at fair value Sohu has minimal debt, … Continue reading Sohu Valuation enhanced by successful Sogou IPO and potential Changyou privatization
2/1/18 Update: Liquid Assets (cash+investments+loan) at 12/31/17 were $1127mm or $21.06/ADS. Chairman Charles Zhang offered to acquire all outstanding shares of Changyou at a price of $42.10/ADS The offered price is significantly below the average valuations of competing companies (27.7 P/E for US/HK listed and 36.9 P/E for China listed) The offered price does not … Continue reading Changyou’s Buyout Price Should be Raised to at least $53
Bloomberg reports China’s Sogou Targets $5 Billion IPO to Chase Rival Baidu. Here's a quick look at what an IPO at this valuation would mean for Sohu which currently owns 38% of Sogou. SOHU has three main businesses: Media Portal, including sohu.com focus.cn and 17173.com. These businesses reported an operating loss of $136mm in 9M16. Advertising … Continue reading Thoughts on the impact on Sohu of a possible Sogou IPO