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: Cosmo Daisey who wrote (12963)	12/23/1998 12:31:00 PM
From: RocketMan	Read Replies (1) of 13594

"how many shares must funds buy?" Estimates from Merryl Lynch: We project an AOL weighting of 65 basis points in the S&P500 Index using the composite close as of December 22(nd). For reference, Disney currently has an Index weighting of approximately 65 basis points and Chrysler had a weighting of about 35 basis points prior to its removal from the Index. o Using an estimate of $650 billion indexed to the S&P500 (source: S&P), we calculate that indexers will need to buy $4.22 billion of AOL. This translates into approximately 2 days of "normal" trading volume (we define "normal" trading volume as the average daily trading volume over the past 63 trading days through December 22(nd)). o AOL selling by S&P MidCap indexers will likely offset some of the buy trade flow from the S&P500 indexers. Using AOL's MidCap weighting of 6.25% and approximately $20 billion indexed to the S&P MidCap (source: S&P), we calculate a sale of $1.3 billion by these funds. o As a result of the above index fund trading, we expect a net purchase of $2.92 billion or approximately 21 million shares, representing roughly 5% of total outstanding shares.

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