I’ve been scratching my head with my retirement portfolio lately because something seems to be missing … and the hole felt gaping.

The list seemed filled with familiar names, which was fine, but it lacked something fresh. Then it hit me: My portfolio had no securities involving the Internet.

I didn’t want to jump right to Google (GOOG) to remedy the problem either. Instead, I wanted something I could really understand and get my hands around. Along the same lines, I wanted someone I knew I could trust with the business.

Yes, I needed a legend … and Barry Diller was the one that came to mind as I thought about the Internet.

Diller is the Chairman of IAC/InterActiveCorp (IACI) — a media and Internet company that consists of more than 150 brands and products.

E-commerce was never the easy way to riches. In the earliest days, there was distrust and fear of ordering something over the Internet. By the time it became accepted, the first movers had already invested tons of capital to get their platforms up.

Trying to integrate with payment providers and shipping warehouses and transportation companies was enough to drive anyone crazy … and updating it all over time wasn’t cheap.

Then, before we knew it, everyone was on the Internet. For a start-up to have succeed in the challenging marketplace, much less become a leader, was practically a miracle at this point.

So for someone like Diller to then be able to identify a leader, swoop in and purchase it for the right price, and let management continue to do what it does best … well … it’s a one-in-a-million shot.

But that’s what he does, and he’s great at it.

Heck, just take a look at some of the brand names under the IAC banner. Count how many you recognize:

These are all brand names that make competition in their particular niche very difficult to challenge. If Diller buys something, you can bet it’s a leader in its sector.

Plus, the thing about having an e-commerce company as part of the retirement portfolio is that it’s a bet on the future. E-commerce simply isn’t going away.

Of course, there’s nothing wrong with Amazon (AMZN) in this context. However, Amazon is just too volatile a choice for a retirement selection. It could drop 30% with no warning, simply because of a quarterly revenue miss. It’s also been a difficult stock to value.

I don’t feel that same risk with IAC. Yeah, yeah, it may fall on an earnings miss. But any stock could … and because it isn’t a momentum stock like Amazon, that’s less likely to happen.

I might have also chosen something like Liberty Interactive (LINTA), since John Malone follows the same strategy, but the stock situation at Liberty keeps changing. There are constant reorganizations and stock re-namings. I wanted something easier to follow.

The other promising aspect of IAC is that, similar to travel sites like Priceline (PCLN), this is not a capex-heavy business. Consequently, I expected a lot of reliable free cash flow … and I was right.  The company consistently generates $300 to $320 million in annual free cash flow every year, and has almost $10 per share in net cash.

The company also raised $500 million by selling 4.75% unsecured Notes a few months ago, to be used to repurchase stock. It is expected to keep growing at a 30% annualized rate for the next five years. Even a P/E of 20 on its $3.95 in net income suggests a $79 fair value target, and the stock trades at only $40 when you back out the cash position.

As both a growth and value play, IAC Interactive makes for a very nice addition to a retirement portfolio.

Lawrence Meyers does not own shares of any company mentioned but may purchase shares of IACI in the next two weeks.