With Alibaba being valued at about $216 billion, Yahoo's stake in the company is valued at $34 billion, Keene said. "Yahoo is valued at $39 just from the Alibaba cash that they're going to have and how much their stake is worth," he said, and that doesn't even take into account Yahoo Japan or its U.S. business.
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Keene expects Yahoo to hit $45 in the next couple of months.
While Max Wolff, chief economist at Manhattan Venture Partners, agrees that Yahoo is undervalued as a trade, he doesn't think it's a good long-term investment.
That's because Yahoo has watched its competitors feed off its traditional revenue stream in display advertising and make more in streaming video, he said.
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"This company spent three or four years watching other people monetize its content and its user base better than it does. And the problem is in Web 2.0 land, four years is an eternity," Wolff noted.
—CNBC's Kate Rogers contributed to this report.
Disclosure: Andrew Keene owns Yahoo and is long calls in November in Yahoo. Max Wolff does not own Yahoo.
Disclosure: CNBC has a content-sharing partnership with Yahoo's finance site.