Yahoo! Inc. (YHOO): Mayer Shows How the Game Is Played

Billionaire investor Paul Tudor Jones’ recent misogynistic comment,“You will never see as many great women investors or traders as men. Period. End of story,” was prefaced by his belief that mothers lose focus when they have children. This can be rebutted with a single name…Marissa Mayer, CEO of Yahoo! Inc. (NASDAQ:YHOO).

If anyone knows how to play the game it’s her. Not only did she just buy Tumblr for $1.1 billion but she also put in a bid for Hulu in the same week. Mayer gave birth last fall and it certainly hasn’t slowed her down. Yahoo! Inc. (NASDAQ:YHOO) investors should thank their lucky stars Mayer, new mom, is investing in the company’s future for them. It’s been one of the best performing tech stocks this last year since she came on board last July, up 70.2%. Even at these nosebleed levels the stock has a trailing P/E of only 7.64 and the PEG reflects only slight overvaluation at 1.36.

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I like the way she rolls. Every holiday we have a Monopoly marathon and Mayer runs the board just the way our family champion does, buying disparate properties, snatching other players’ rejects, and building upon the buys.

Since last July she’s bought Summly, the news brief site, the aforementioned Tumblr, PlayerScale (a gaming infrastructure company), and video chat team On the Air. I almost forgot another buy, Flickr, the photo sharing service that competes with Instagram, which is owned by Facebook Inc (NASDAQ:FB). Yahoo! Inc. (NASDAQ:YHOO) could have had their own YouTube if it weren’t for the protectionist French government nixing the Dailymotion bid. Quel dommage!

But wait! There’s more! Yahoo has made significant progress with developing its own entertainment content, simultaneously challenging Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN), and Google Inc (NASDAQ:GOOG), doubling its video content. In less than a year Mayer has built up what could only be called a moribund and demoralized Yahoo! to being well on the way to a triple threat: cloud, content, and search. Yahoo! Inc. (NASDAQ:YHOO) has sat out the game for the last decade in its own version of Silicon Valley jail. But as my family knows a motivated player can come from behind by running the board.

Now, Yahoo! Inc. (NASDAQ:YHOO) investors have every reason to wake up and anticipate a day of new headlines. Maybe Mayer’s back-to-the office edict stirred up controversy, but these strategic acquisitions and offers are making that very old news indeed.

And what she has stayed away from is significant — no tablets, phones, gadgets, or geegaws. With a search and content company you can have enormous margins with fairly low overhead just keeping enough M&Ms and free food to keep the developer and engineer geek brains on full throttle. The company has very little debt compared to total cash — just $36 million to $3 billion in cash.