America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Harry Larson who wrote (7971)	2/18/1998 10:38:00 AM
From: steve lipson	Read Replies (2) of 13594

Re mutual fund bailing out of AOL. You bears will be the death of some poor novice investors who don't know any better. Let's do a little math before jumping straight to the conclusion you hope to reach that AOL at last is going to go down in flames. Assuming that Capital Research acquired those shares throughout the first three quarters of 97 (since they were the largest shareholder as of the end of AOL's fiscal year last fall), or even back into 96, they probably paid an average price of no more than $40 to $60. That means they paid at most $500 million to $770 million for AOL stock. Today, with fewer shares at the lofty level of 112 they still hold nearly $1.1 billion in AOL stock. That's 0.5 percent of their total portfolio. By way of comparison, even if their total assets were quite a bit lower last summer, say $200 b, 12.8 mm shares of AOL at its prices back then would have been less than 0.4 percent of the firm's total portfolio. By my basic back-of-the-envelope calculations it's a little early to declare that they are abandoning AOL when the percentage of their portfolio allocated to it may be higher than it's ever been.

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