The Twitter CEO recently stepped down. The interim founder Jack Dorsey has come in to replace in the mean time. The stock market has not been happy with this strategy. There is still potential for Twitter (TWTR) but it will take longer than expected to see the value. This is turning to more of a long-term value stock.

Seth Klarman is a well-known billionaire stock investor that runs the Baupost fund.  He has a very great record of amassing big wealth through his value-based purchases.  In the past quarter, he bought Ocwen (OCN) that was over $55 just a couple years ago and then it reached bottom at $6 just this year.  He’s known to make safe investments that will do really well or else will only lose a little money at the end.  I think that is his strategy with this company.  As risky a play that Ocwen looks, it does look like it technically has hit the bottom and its time for it to rise.

Fundamentally, JP Morgan recently bought a bunch of Ocwen’s agency backed loans.  The company has also sold these loans to Nationstar as well.  The company wants to focus on non-agency subprime which they believe would make their customer service better for owners of these loans.

I recommend looking at OCN and putting a small percentage in it for a 20% gain at $12.  Also, a stop at $9 just in case things go sour!

Warren Buffet calls a value play a business that is being under-valued.  If the stock book price is higher than the stock price, it is called a value stock and it would be a value play.  However, for Twitter, as much value as there is by the monetary definition, I see value in a different sense.

There is value in that Twitter brings a commodity that has true value in this world.  When something dramatic happens, Twitter is always the first one to be reporting it.  This means that a sudden world disaster, a catastrophe in a country, a large news story that breaks out, or even that innocent tweet that becomes something profound and gets popularized widely are all such things that only Twitter can provide to the public.  This is a value that only a product with true benefit to the world will succeed.

Twitter also continues to bring to bring new products online that follow their ‘live feed’ experience.  You can look at their Vine app that does live short videos.  Their latest creation Periscope is live stream that you can publicly view and record to show to the world.  Again, they are bringing value that helps the world spreads cultures, news, and beliefs that we would never hear about.  This is true value.

The stock closed on May 8, 2015 with a price of $37.59.  This is a great price to buy and it even becomes a better business for other companies to acquire.  If Google acquired Twitter, they would have an excellent advertising stream for their Adsense network.  They have already partnered with Twitter through their Doubleclick partnership to bring Twitter advertising to their ad platform.  If they see success, I see no doubt that Google would be interested in getting a bigger stake into Twitter especially at these prices.

I still believe Twitter is a great buy and I don’t see it going down much further.  There should be strong support around $35.

Twitter (TWTR) had a significant drop in stock price the past couple of days.  It was at $52 and now it is in the $38s.  It has lost over 25% of its value.

Why did it drop so much?  Their earnings were lower than expected.  Their future guidance is lower than they guided earlier this year.  Their growth rate has gone down.

All those things above sound bad but now you must look at the bright side.  The negatives mentioned above is priced into Twitter’s depressed stock price.  You must also remember that Twitter owns very popular apps like Vine and the newly created Periscope.  Both are very popular.  The Periscope has been very elegantly and beautifully created and it has grown to be one of the top apps in the ITunes store.

In addition, Twitter has a couple deals with Google to integrate their advertising platform with Doubleclick.  This will open a new ad market for promoting Twitter’s Sponsored Tweets into Doubleclick’s network.  With many companies using Doubleclick for advertising, it will make their job that much easier to do ads on Twitter.  Earlier this year, Twitter partnered with Google to integrate the tweets into Google’s search engine.  This will be a major benefactor to Twitter for growing their user base.

As much as Twitter has had issues, it has a huge brand and huge marketing engine that the world freely promotes for them.  They also are continually innovating and working on new products and apps to keep their technology up-to-date and make sure they are in the latest trends.  They do a very good job at growing but their major next step is monetization.  With their stock price so depressed, I see the downside to be very little versus the reward that you can get by owning it.

I recommend you do your due diligence and buy below 41.

If you wish to own a stock that you can buy without any issue, I would recommend Berkshire Hathaway (BRK-B and BRK-A).  This is one stock that has continued to outperform its peers year after year.  Even at times where it had its dips, it continued to move up and increase value to its shareholders.  Warren Buffett and his team has continued to add value to the company.  A couple big moves that they had in the recent years were the purchase of Burlington Railroad and Hertz.  During the recession, he partnered with Goldman Sachs (GS) and Bank of America (BAC) to get some nice loan terms and options to purchase their stocks.  Overall, he has done an excellent job and I only see that trend continuing in the future.

Warren Buffett recently purchased more IBM.  He continues to be bullish in this technology stock which is interesting since before IBM he considered technology to be a taboo in his investment portfolio.  It will be interesting to see how it turns out but if you look at IBM’s stock trend it just moves up like Berkshire Hathaway.