Granted, I am a numbers guy, so even asking whether a new CEO is enough to warrant buying a stock is a stretch for me. While quality leadership is certainly important, successful stock market investments require the numbers to work and no matter how great the CEO, they can’t magically make the numbers work all by themselves (unless you want the books to be cooked of course). Still, I am intrigued by Marissa Mayer’s hire as the new CEO at Yahoo (YHOO), even though the company is clearly not gaining relevancy on the Internet. A 1990′s darling, Yahoo has lost its lead in search (thanks to Mayer’s former employer, Google) and really only has a stronghold in a few areas of the web, such as email and fantasy sports.

Still, considering who has been occupying the corner office at Yahoo over the last decade, it is compelling that a tech person of Mayer’s caliber is now running the show. From 2001 to 2007 the company was headed by a movie studio exec (Terry Semel). From 2009 to 2011, they brought in a Silicon Valley veteran (Carol Bartz), but she previously ran Autodesk, a software company that sells products to help engineers design factories, buildings, and 3D animated characters. Is it really that surprising that Yahoo has been treading water for all these years?

Enter Marissa Mayer, Google’s 20th employee (and first woman engineer) who had been leading successful efforts in areas where Yahoo actually competes, like web search. If anyone can help reinvigorate Yahoo, it might just be her.  But isn’t that taking a big leap of faith? Sure, but there is another factor, other than the CEO, that makes a bet on Yahoo shares at $16 each worth a look. The numbers.

Yahoo’s current market value is less than $20 billion. As of September 30th, the company’s stake in Yahoo Japan ($7.7 billion) and Alibaba ($8.1 billion) account for the majority of that valuation. Even if you deduct the tax liability that would be incurred if Yahoo were to monetize these stakes, the organic Yahoo operations are priced at just $10 billion. What do investors get for that $10 billion? To start, how about nearly $7 billion of net cash on the balance sheet (plenty for Mayer to begin a transformation)? That leaves a mere $3 billion valuation on Yahoo’s core operations, which generated free cash flow of $250 million in 2011. That is a low price even if the company doesn’t grow at all going forward.

Yahoo stock today looks to me like a call option on Marissa Mayer. As I said before, a CEO alone is not a good reason to buy a stock. But what if you have a unique change in leadership that could very well pay off in spades, and the meager public market valuation of the company basically affords you limited downside risk? The combination of those two factors makes the stock an interesting opportunity in my view. If Mayer, like her predecessors, fails to reinvigorate the company, then the shares likely stagnate here in the mid teens. However, if she succeeds, as her resume seems to suggest she could, there is a lot of upside to the story. It feels weird for me to say, but Yahoo at $16 with Carol Bartz running the show didn’t interest me one bit. With Mayer it’s a different story.

Full Disclosure: Long shares of Yahoo at the time of writing, but positions may change at any time

From my perspective Google (GOOG) has become a very difficult company to analyze as an investment. The company has so much money and resources now that it really just seems like they are getting their hands into everything. As their core advertising products (Adwords and Adsense) begin to mature the big question is, where will the next leg of growth come from? Google surely has the people and the cash to reinvent or create new products that actually make the company money, but most of their time nowadays seems dedicated to releasing products that don’t make a dime. The Chrome web browser, Android operating system, and the recent unveiling of Google TV are just a few examples.

Along with the rest of the stock market, Google’s stock has taken a hit and now trades for around $470 per share, down about 25% from its high of 52-week high of $630. For all of the “growth at a reasonable price” (GARP for short) investors out there, the stock probably looks enticing. Based on 2010 estimates of $28 per share in earnings, GOOG trades at less than a 17 P/E. The EV/EBITDA multiple on trailing results is 12, which is very reasonable for a growth company.

The question in my mind is “Are they just going to keep spending money and resources on innovative products that don’t add to the bottom line?” Google TV, for instance, looks very cool but how is the company going to make money by giving out free search software for televisions that allows consumers to find their favorite programs across multiple platforms (cable, web, streaming, etc)? As soon as online advertising market share (as a percentage of total advertising spending) starts to level off, where is Google’s growth going to come from? And if this question is really as up in the air as I think it may be, is the stock really even that attractive at 17 times earnings?

I really enjoy buying and selling on eBay, but the company’s auction site has matured and now growth is in the single digits. Today investors can buy eBay stock for less than 13 times earnings. eBay hasn’t really found another way to boost growth, and as a result the once high-flying stock now trades at a discount to the S&P 500 despite being a dominant player in an attractive and very profitable market segment.

It is for this reason that I find it very difficult to evaluate the investment merits of Google stock today. On one hand the stock is quite inexpensive relative to what Google has accomplished up until this point. On the other hand, if growth continues to slow in the company’s core advertising markets and they simply spend excess cash flow producing innovative products that are given away for free, I am not sure that earnings will grow fast enough to net investors sizable returns going forward. And if the P/E continues to contract, as it has for companies like eBay, creating shareholder value becomes even more difficult. While the downside looks limited given how cheap Google stock is today, I have mixed feelings as to whether it warrants the commitment of new capital.

As always, your thoughts are welcomed and appreciated.

Full Disclosure: Peridot Capital had a very small long position in Google and no position in eBay at the time of writing, but positions may change at any time