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John Hussman's Hussman Strategic Growth Fund (HSGFX, a mutual fund that uses options to hedge long positons) has the best risk-adjusted performance of any mutual fund.  That's why his weekly letter is worth reading. In the most recent, he argues that Google (ticker: GOOG) is worth no more than $40 per share. The relevant extract:

Initially, I estimated Google to be worth about $24 a share. It has since enjoyed some very good operating surprises. I'd currently estimate its value somewhere in the $30's. No zero is missing in that last sentence, though the quickest way for the company to substantially enhance its intrinsic value would be to buy everything it possibly can with its own overvalued currency. Having made similar comments regarding the value of Cisco, Sun, EMC and Oracle near the peak of the tech bubble, with value estimates (which turned out to be slightly optimistic) at small fractions of their going prices, I'm pretty comfortable with that figure.

The difficulty with Google isn't in the product. It's neat. It's hip. I use it almost daily. The real question is this – why do we naturally assume that Google's revenues and earnings are going to grow exponentially from here? In a competitive market, with few barriers to entry and no particular brand loyalty, an advertising company that's valued at 1/5 the market cap of General Electric is not likely to mount a secure defense for its revenue stream. Unlike Microsoft, Adobe, or even Yahoo and Ebay, there's currently no benefit to users in aggregating around the same product as their “standard

Source: Hussman: Google worth less than $40 per share (GOOG)