American Investors Panicked After Russian Tech Giant Yandex Shares Down 17.8%
NEW YORK- October 21, 2018
Russian internet search engine giant Yandex NV (NASDAQ: YNDX) faced an unprecedented decline in shares on Thursday, reaching a new 52-week low along with the news that Russian state-controlled bank Sberbank is angling to take control of it. Its stock closed at $29.49, resulting in $2 billion loss in one day.
On Friday, the stock traded on NASDAQ at as low as $26.50 and last traded at $27.42 (-7.02%), with a volume of 1,254,168 shares.
The top institutional holders of Yandex NV shares are U.S. investors. Wellington Management Company, LLP owns 14,742,445 shares (5.08%), FMR, LLC owns 11,880,500 shares (4.09%), Capital Research Global Investors with 9,238,886 shares controls 3.18% of the company, and OppenheimerFunds Inc. lifted its holdings in Yandex by 37.4% in the second quarter. OppenheimerFunds Inc. now owns 8,924,602 shares (3.07%) of the information service provider’s stock valued at $320,392,000 after acquiring an additional 2,427,233 shares during the last period, French Carmignac Gestion with 8,543,751 shares owns 2.94% of the company, Morgan Stanley has 2.13% of the total stock, Blackrock Inc. — 2.12%, Melvin Capital Management LP — 1.98%, Wells Fargo & Company has 1.87%, and Harding Loevner LLC has 1.63% of Yandex’s stock.
A number of hedge funds have recently modified their holdings of the stock. Cornerstone Wealth Management LLC bought a new position in Yandex in the third quarter worth $17,395,000. First Hawaiian Bank bought a new position in Yandex in the third quarter worth $115,000. Genesis Asset Managers LLP lifted its position in Yandex by 1,536.8% in the third quarter, now owning 3,543,337 shares of the information service provider’s stock worth $116,044,000 after purchasing an additional 3,326,862 shares during the period. XR Securities LLC bought a new position in Yandex in the third quarter worth $274,000. Finally, United Services Automobile Association lifted its position in Yandex by 169.7% in the second quarter. United Services Automobile Association now owns 268,677 shares worth $9,646,000 after purchasing an additional 169,061 shares during the period. 69.28% of the stock is owned by hedge funds and other institutional investors, according to Marea Informative.
Several equities research analysts have recently weighed in on YNDX shares. ValuEngine cut Yandex from a “hold” rating to a “sell” rating in a research report on Tuesday, October 2. Zacks Investment Research cut Yandex from a “hold” rating to a “strong sell” rating in a research report on Monday, September 17th. Finally, BidaskClub cut Yandex from a “hold” rating to a “sell” rating in a research report on Saturday, September 8th.
So far the two parties haven't settled on a framework for the potential deal, but added "various options are being discussed—from a new share issue and share buy-back in the open market to the sale of some of Yandex's primary shareholders' stakes," according to media.
U.S. investors are concerned over the possibility that Sberbank's stake could mean potential dilution for existing shareholders, though a share issuance and subsequent buyback would be presumably a zero-sum game. Market strategists also say that Yandex's autonomy could suffer with a government-owned bank (with the state’s 52.5% ownership stake) as its controlling stakeholder that could potentially lead to less efficient management.
If Sberbank takes a controlling stake in one of the world’s leading internet search companies, it could suddenly sell it later to some financial institution, which has been sanctioned in the U.S. In this case, American investors will be forced to sell their Yandex shares because the law prohibits them from dealing with persons from the sanction list and they will have to do it in one day, bearing huge financial risks.
Now the total weight of portfolio investors in Yandex NV stock is just over 79%, and in total 332 funds and investment companies own Yandex shares. They account for 229,952,620 shares of the Russian internet giant.
It's worth noting that Yandex and Sberbank have a long history of collaboration. Most recently, that history grew to include the formation of the former's Yandex.Market joint venture this past April in which both companies invested an equal $500 million. Yandex declined to comment on the report, while Sberbank representatives simply denied that the bank has made an offer.