I’ve bought, sold and bought many stocks (Electronic Arts, aQuantive to name two).  But for reason, I’ve never sold any Yahoo! stock… I’ve only added to my position over time.  I don’t know why that is.  Maybe like Warren Buffett, I have subconsciously made Yahoo! a lifetime holding.  I doubt it.  But yesterday, at 2:16pm I was in a meeting, otherwise I would have added some more… in fact, I would have added at any point in the morning.

Why?

Yahoo! is the world’s largest web-based media property.  A lot of the short-sellers (and there are many) and the long time bulls  really get granular with Yahoo!, and usually, this is wise.  But Yahoo! is ultimately a play on the web.  In fact, it is a diversified play on the Web.  If you want search, buy Google.  I regret not buying Google at $100 (let alone the $85 IPO price… but Google technically never traded at $85, opening up at roughly $98 if my memory is right) but despite that, I still maintain that I much rather own Yahoo! at $30B than Google at $200B.  It’s all about having a margin of safety, to quote legendary investor Warren Buffett.

Today, a day after Microsoft’s chief dealmaker resigns, the NY Post reports (for the 3rd time in less than a year, mind you) that Microsoft is mulling making its offer for Yahoo! public.   Yahoo! has historically plateaued at $34 in the past 12 months… first in large part to a rumor that Microsoft was mulling making a $40/share offer for Yahoo! (or $50B when measured in market cap) and then again over Alibaba euphoria. After the Alibaba peak, the stock crumbled back down to the low $20s.

The stock is now up 5% - yesterday it was down 5% - so is 24 hours it has swung 10% on no news but a lot of hype.  That’s the stock market, I guess.

Will Microsoft buy Yahoo!  I don’t know.  I think Microsoft will ultimately sell MSN.com/Live.com to Yahoo! and get about 35% of the merged company as I suggested here, and John Battelle did here and Henry Blodget did here.

One thing Yahoo!’s got is options, they are:

- status quo
- merger with eBay
- acquisition by/merger with Microsoft
- taken private
- can Google buy Yahoo!

Ultimately, Yahoo! is a very moody stock to own.  The swings over the past 12 months have been pretty clear:

January 2006 - October 2006 (10 months): Downward swing from $40 to $22

October 2006 - May 2007 (8 months): Upward swing from $22 to $34

May 2007 to September 2007 (4 months): Downward swing from $34 to $23

September 2007 to November 2007 (2 months): Upward swing from $23 to $34

November 2007 to January 2008 (2 months):  Downward swing from $34 to $21.42

So, if you were a betting man - which, let’s face it, the stock market totally is - what direction and at what velocity will Yahoo! swing in and to next?

One thing is sure, even if MSFT buys Yahoo!, it won’t be the biggest web media merger of all time.  For a comprehensive industry-wide look at some of the largest M&A’s of all time, click here.

Disclaimer: Long Yahoo!