This is the first in a series of posts which will be focused on stock picks on a long/short basis which ISYN will track the performance of. This will not be actively managed and each idea will be independent of the others – no portfolio construction, etc. I will use the closing price of the day a pick is recommended.
Do your own research prior to investing in any stocks mentioned here. Always assume ISYN is biased via direct or indirect ownership in the companies mentioned.
YHOO
Whether or not the statement made today by Microsoft CEO Ballmer holds any weight Yahoo! (YHOO) is looking very attractive at these levels. A few things to consider.
General Reasons
Oversold market; fair earnings power with excellent debt coverage; acquisition target within previous six months at price > 50% today’s price; huge online significance
Points of Interest
*Trading at ~6x cash & ST debt securities
~18b USD market cap
~3b USD in cash & ST debt securities
*Carl Icahn sits on the Yahoo! board now and was a proponent of the initial buyout offer
*I believe that an economic slowdown will have a relatively muted impact on virtual businesses compared to physical ones
*As recent as June MSFT offered $33 per share… discount YHOO back to $18-20 (where it traded just prior to the offer) from $30 , then discount in an economic slowdown (choose your rate) and we’re still looking at $13 being a steal
*It’s doubtful anyone would disagree with the macro assumption that online/virtual businesses or extensions of businesses are the future. Name recognition is essential (think of it like ‘location location location’) and Yahoo! is one of the best recognized names on the internet.
*I know GOOG is trading at a better P/E but fundamental comparisons at this juncture in time are essentially worthless with the massive and reckless selling occurring in many tech names.
YHOO
