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AllStarPortfolio (23.98)

AllStarPortfolio - Two Picks Each for Top Players !

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September 17, 2009 – Comments (7) | RELATED TICKERS: ETRM , DRYS , WNR

We are talking about everybody getting two picks, instead of one. Here. GO THERE TO COMMENT OR REC, so the job is tidier.

Also, don't forget. If you give your best pick, give your 'best' pitch. And if you want a say on how your 'money' is used on WallStreetSurvivor, let me know. Each Player gets 2k starting to use how they want, either all on one pick, or split between however the fool likes.

And don't forget, you can call dibbs, or set limits.

The Rules are also on the previous post.

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It looks like there is NO dissent to each player getting two picks, so i will start loading them today.

TRY TO PLACE ALL PICKS (and recs?) ON THE POST I KEEP MENTIONING (You can feel free to rec this too:-)

-solaris

7 Comments – Post Your Own

#1) On September 17, 2009 at 11:02 AM, AllStarPortfolio (23.98) wrote:

are the links not working?

try this

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=260078&t=01003120767258779834

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#2) On September 17, 2009 at 1:40 PM, APJ4RealHoldings (47.94) wrote:

I'm curious to see how this portfolio will hold up in a down market...only time will tell.

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#3) On September 17, 2009 at 1:42 PM, APJ4RealHoldings (47.94) wrote:

The "here" link in your blog isn't working

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#4) On September 17, 2009 at 3:31 PM, SolarisKing (< 20) wrote:

APJ4RealHoldings (87.59) wrote:The "here" link in your blog isn't working

'

Yes sir, that's the reason for comment #1

I am also curious to see how it will hold in a down market, but each player is free to close at will.

-solaris

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#5) On September 21, 2009 at 10:15 AM, TigerPack1 (33.46) wrote:

Solaris,

Here's my new pick for AllStar - YHOO

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Yahoo! (YHOO) is a great value proposition with nearly $9 billion in net assets, mostly liquid, when measured against a $21 billion market cap.  Please name another brand-name, blue-chip internet company, earning substantial sums of money, selling at 2 times its liquid book value?  Answer: another one does NOT exist.  In fact, Yahoo! has become the new-age media conglomerate that every newspaper, internet content provider and television network has been expending billions of dollars trying to emulate.  Basically, YHOO is “the” new national newspaper, and the redesign of its home page the last few months, including direct links and partnerships with the likes of Ebay and Facebook and every other important online player is solidifying its position as preeminent going into a new economic advertising cycle.

2009's “free” cash flow yield will be THE HIGHEST in the company's history for investors based on the low stock price currently, AND THAT IS CALCULATED AT A BOTTOM IN THE OVERALL ECONOMY.  The “free” cash flow yield today is around 5%, BEFORE a pick-up in the economy and advertising activity, plus the positive effect of the Microsoft search deal.  In years past, YHOO has traditionally sold at a monster premium stock valuation vs. other stocks generally and even the majority of profitable internet-based businesses, while today it sells on par or a discount to other potential investments for your dollar.

Wall Street initially cried a river over the Microsoft search deal, because no upfront money was being paid to Yahoo!  However, long-term owners of Yahoo! will collect huge sums of revenues without spending significant new capital in the heated competition with Google search.  Basically, Microsoft will pay a majority cut of all ad revenues generated by Yahoo! search and keep up the database, without Yahoo! spending much money to run the operation for 10 years.  After that, Yahoo! will still own its large database and owe Microsoft nothing.  I don’t see how any rational observer can call this a bad deal?  Incidentally, when you collect billions in revenues annually without spending substantial capital to create the sales, nearly the entire sum is kept as PROFITS for shareholders.  Profit margin expansion will be nearly exponential in 2010 and 2011, largely as a result of this deal. 

In contrast, Google is having to reinvest ever greater sums of money to keep search growing and competitive with Yahoo! and Microsoft.  Google’s "free" cash flow as a percent of sales will be well UNDER 20% in 2010, and is around 20% currently.  After the Microsoft deal, YHOO will slash search’s capital spending to almost nothing vs. years past.  The "free" cash flow percent on revenues (profits available for shareholders to invest in other businesses or pay as a dividend without hurting future earnings) will be well ABOVE 20% next year, to as high as 25% of each dollar in sales in 2011-2012 as Yahoo! sells itself simply as the greatest content provider on the global internet stage.

After factoring in the effects of a better economy in 2010, the Microsoft deal that will add considerable “free” cash flow, and expected rising rates of inflation (which will be a boon to low cost, internet content/advertising companies like YHOO), Yahoo! should see a “free” cash flow number of better than 6.5%, if not 7.5%, next year based on the $17 stock quote, and well above 9% in 2011-2012.

What's not to like about this super-huge profit margin company with a pristine balance sheet, and the leading brand name in content on the internet???

The company could buy back 25% of the float of outstanding shares with the $5 billion in actual cash on hand, thereby increasing each existing shareholder's interest by 25% near the bottom of the economic cycle, and reported sales per share, cash flow per share and earnings per share by another 23%-25% (after deducting the 1% yield on money in the cash position that will disappear from the income statement on $5 billion, but accounting for the incredible accretive action of this move)!!!

Yes, YAHOO has plenty of options to increase investor worth with nearly 50 cents on each dollar of stock price in liquid investments that can easily be reshuffled.

The volume accumulation trend on Wall Street of Yahoo’s stock during the last month, after the supposedly bad deal with Microsoft highlighted clear buying by institutions and large brokerages in preparation for a SIGNIFICANT upmove.  I have been screaming buy to everyone that will listen since the deal with Softie was announced, and made Yahoo! my single largest position when it traded closer to $14 per share a few weeks ago.

The brokerage upgrades the past week are one catalyst to reverse Yahoo! into a solidly higher price trend.  Getting rid of turnaround artist Carl Ichan is another positive going forward (he has been selling shares at the low price the last few weeks after buying near the peak in the upper-$20s last year), as is the Alibaba deal to raise MORE cash and lock-in some gains from its significant Asia internet holdings.

I expect a large stock buyback announcement any day now, with all the cash sitting on the balance sheet earning 1% annually, that could be reinvested in the growing content/ad business at “free” cash flow yields of closer to 7%.  Buying back shares under $20 each, would be a great long-term move by management. 

This new-age media conglomerate should trade well above $30 a share next year given a more rational appraisal of the company’s terrific long-term growth prospects and the potential moves that could add real value to shareholder worth from the $5 to $9 billion in cash-like capital yet to be invested.

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#6) On September 21, 2009 at 10:24 AM, portefeuille (98.74) wrote:

Hi Solaris,

please enter SQNM as my second "pick" for the allstarportfolio (no limit). My "pitch" is in comment #1 here.

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#7) On September 21, 2009 at 10:28 AM, portefeuille (98.74) wrote:

... and please "buy" SQNM shares for the allstarportfolio here (no limit, see comments #16,17,18 here).

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