Greenlight Capital, the hedge fund run by investor David Einhorn, acquired a significant long position in Yahoo Inc during the first quarter, citing Yahoo's most valuable asset as its stake in China's Alibaba Group.

In a letter to shareholders on Friday, a copy of which was obtained by Reuters, Greenlight disclosed the investment in Yahoo.

Shares of Yahoo were up 2.6 percent at $18.16 in afternoon trading on Monday.

We would not be surprised if YHOO's 40 percent stake in Alibaba Group alone was ultimately worth YHOO's entire current market value, the letter said.

A spokesman for Greenlight Capital declined to comment.

(Reporting by Alexei Oreskovic and Jennifer Ablan; Editing by Tim Dobbyn)

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