Stockpickr: Trade Like the Berkshire Board

Assuming that its new advertising platform, Panama, is a second-half 2007 story and that revenue continues to grow at the current rate, by 2008 Yahoo! could be trading at a meager 14 to 15 times EBITDA at current levels.

It's difficult to know what to compare this to. Google(GOOG) continues to exhibit phenomenal growth, but it trades at 30 times EBITDA. And IAC/InterActive(IACI) -- which is really a collection of disparate Web sites, such as LendingTree.com, Ask.com and Citysearch.com -- trades at just 10 times EBITDA.

Note that IAC/InterActive is also part of this Berkshire Hathaway board of directors portfolio because Donald Keough is on the board of IAC/InterActive.

Yahoo! is primarily going to be an execution story over the next year. If Panama is a huge success, then it can easily exceed the revenue and margin expectations of analysts, propelling shares back into the $40s.

I also believe gains from its acquisitions of Web sites Flickr and del.icio.us will kick in over the next 12 months, causing the company to surpass expectations.

Intel, on the other hand, is dirt cheap. The company has a ton of new products and innovative technologies coming out. Its margins are improving despite a price war with Advanced Micro Devices, and it trades for less than 10 times cash flows and has $7 billion net cash in the bank. My target for Intel is $28 to $30 over the next 12 months.

Finally, there's Daily Journal(DJCO), a micro-cap name that is a roll-up of various legal newspapers and magazines. Essentially, it was started and managed by Charlie Munger.

The company trades for 11 times cash flows, but it's definitely a micro-cap, with $5 million net cash in the bank and only a $60 million market cap. With the rise of the Internet, Daily Journal has basically traded flat for the past 10 years.

Daily Journal (DJCO)

But it's a somewhat "secret passion" of Munger's to keep this company going.

For more of Munger's passions, we keep track of his holdings (separate from Berkshire) at the Charlie Munger page on Stockpickr.

It's also interesting to note that the other "oracle of Omaha," Wally Weitz, is a shareholder of Daily Journal. Check out the Wally Weitz page on Stockpickr. I've also written about him in the past as a potential successor to Buffett, now that Buffett is looking for an apprentice.

Ultimately, though, I believe Buffett is going to select Thomas Gayner, who manages investments for insurance company Markel(MKL). We keep track of Markel's investments on Stockpickr, and Markel is also a member of the next Berkshire Hathaway portfolio.

For the remainder of holdings and interrelationships of the other members of Berkshire Hathaway's board, including several surprising micro-caps and small-caps, make sure to take a look at the Berkshire Hathaway board of directors portfolio.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Daily Journal to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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