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Strategies & Market Trends : Contrarian Investing

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From: pcyhuang	10/16/2006 10:01:08 AM
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Yhoo -- Contrarian Alerts! Yahoo! Inc.(NYSE YHOO @$24.42) and its subsidiaries provide Internet services to users and businesses worldwide. A volume-reversal screen alerts us to Yahoo's qualification as a timely contrarian investment. On Oct. 13, YHOO traded 51,337,511 shares vs. a 3-month daily average volume of 24,388,700 shares. Here are the key statistics: finance.yahoo.com Here's an analysis of YHOO's attraction. "Yhoo! trades at a $34bn market cap. They generate almost $500mm per quarter in cash flow, that's $2bn per year. So on the face of it, it appears that Yahoo! trades at 17x this year's cash flow. But that is misleading because Yahoo!'s got a bunch of cash on its balance sheet and also owns a nice chunk of Yahoo! Japan. So after you take out that cash and Yahoo! Japan, Yahoo!'s core business might trade at something like 12-13x EBITDA. You could pay an acquisition premium to the public shareholders and still make a return at that price." Source: Yhoo finance. Insiders' and Institutional Support: Recent insiders purchase around $26-27 per share. Two ETFs and 10 mutual funds have YHOO as of their top-10 holdings. Conclusion: Value + Insiders and Instutional Support + High reversal volume = Timely Contrarian Investment. pcyhuang

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