Yahoo shares reach 18-month high as investors warm to new CEO SAN FRANCISCO (Reuters) - Yahoo Inc shares reached their highest level in a year and a half, as investor confidence grows that new Chief Executive Marissa Mayer can pull off a comeback that eluded three of her predecessors. The Internet pioneer has yet to actually provide Wall Street with any hard evidence that its business is turning a corner - and she has warned that it will be a lengthy job - but investor faith in the ex-Google executive is running high. Hedge funds Tiger Global Management and Greenlight Capital Management recently disclosed large stakes in Yahoo, accumulated during the third quarter. "Money managers are staring to want to own this name again," said Colin Gillis, an analyst with BGC Partners. "For the amount of traffic they have, and the assets they have, they should be able to squeeze some value out of that," Gillis said, referring to Yahoo. With Mayer at the helm, he said, Yahoo has "finally got somebody who the market believes can do that." Gravity Capital Management's Adam Seessel said that Mayer's recruitment of various Google Inc employees, including recently hired Yahoo Chief Operating Officer Henrique de Castro, has also helped burnish Yahoo's image. "What the market is seeing is not (financial) numbers so much as they're seeing people voting with their feet, people moving from Google to Yahoo," said Seessel, whose firm owns Yahoo shares. "All these people from Google wouldn't be following her if they didn't think that she didn't have some good cards to play," he said. Shares of Yahoo finished Monday's regular trading session up 2.8 percent at $18.36, amid a broad market rally. The last time Yahoo traded above $18.30 was in May 2011. Yahoo ranks among the world's most popular websites, with roughly 700 million monthly visitors. But the company's revenue has eroded, amid competition from Google and Facebook and an industry-wide change in the online advertising market that has compressed prices for the online display ads that are key to its business. The company has been rocked by internal turmoil: CEO Carol Bartz was fired over the phone and CEO Scott Thompson left after less than six months on the job due to questions about his academic credentials. Mayer, Google's first female engineer, took the top job at Yahoo in July. In a conference call with investors last month, Mayer said that making Yahoo's online products more smartphone-friendly was her top priority. Investors and analysts on Monday dismissed a weekend report in The Telegraph that said Yahoo was in discussions with Facebook about a search deal, particularly after Facebook issued a statement denying any such talks. People expect a better search experience on Facebook. We are working on improvements to better meet those expectations but are not in talks to enter into a new search partnership," Facebook said in a statement on Monday. Still, analysts say that search represents one of the key opportunities that Mayer will focus on as she moves to revive Yahoo's fortunes. A 2010 deal struck by former CEO Bartz outsourced the back-end technology of Yahoo's search to Microsoft Corp, but deal has failed to deliver an expected boost to Yahoo's search advertising revenue. "Certainly search could be resuscitated," said Gabelli & Company analyst Brett Harriss, who said Yahoo should be worth $26 a share based on a six-times multiple of its earnings before interest, taxes, depreciation and amortization. "It was a disaster for a year and a half," said Harris. Everybody hated the board, you had a while of transition where you went through three or four CEOs quickly. Now, he said, there's finally a CEO "that investors can believe in."