USA Interactive

"Management is leadership, and through the years, Barry Diller has been able to attract at the divisional level really, really good people. And the key at USA right now is that he's got tremendous, tremendous management. So Barry really develops management as well as anyone I've seen.

"But probably more important, Barry has some wonderful businesses that are tremendous cash generators. The market value of the equity of USA is around $9 billion right now. Just the subsidiary companies, in the last quarter, generated $200 million of cash after they got finished funding 60 percent growth in the operating profits of the business. It looks to us like you get, for $9 billion, a business that generates at least $800 million of free cash a year. And that's very cheap under any set of circumstances.

"These businesses' cash-generating ability is vastly underappreciated. Barry collects money before the service is performed, so that the faster these businesses grow, the more the cash generates. The only business I've seen that's even close to this in cash generation is Microsoft, and when Microsoft was doing it, boy, that was a good stock then."

Walt Disney

"The stock right now is trading about the level that it traded in 1992. Since '92, they opened five theme parks, bought a broadcast network, in addition to many TV stations and various cable networks. So you're basically buying the stock at '92 prices.

"We think the cash flow is probably depressed in the neighborhood of $1.5 billion, due to internal problems at ABC and external problems at the parks. Even at this depressed level, the company in the last quarter generated in free cash flow about $600 million -- that's how much the debt declined. The company, if they get to the level we think they can in an economic recovery, will be generating $2 billion to $2.5 billion in free cash flow.

"The whole value of the equity right now is in the neighborhood of $28 billion. Just by itself, ESPN -- which most people don't even understand is owned by Disney -- is probably worth $10 billion. So the stock looks very cheap to us.

"I don't know what's going to happen to CEO Michael Eisner. But the stock really is on the bargain table."

International Game Technology

"It's a monumental free cash flow generator. It manufactures slot machines and leases slot machines to casinos.

"More than 100 percent of the earnings per share -- which we think next year could approximate $4 -- more than 100 percent are distributable, because the company requires less capital spending than it does depreciation, and of course, slot machines don't have inventory or receivables, so there are no current asset requirements.

"So the company can grow 15, 20 percent. If there are more jurisdictions that allow gambling -- and we think that's going to happen, we think that's a no-brainer with states in a lot of (financial) trouble -- we think growth will accelerate. So the stock looks cheap."