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: Highway Jim who wrote (13096)	12/25/1998 3:11:00 PM
From: James Thai	Read Replies (2) of 13594

There is still a HUGE amount of buying from index funds to come. archive.thestreet.com Don't think that they've all bought yet, here's an excerpt from the article. Consider the mammoth, $70 billion Vanguard Index 500 fund. With AOL set to comprise about 0.6% of the S&P 500's total $9.7 trillion market cap, the fund will need to match that weight in its portfolio. That works out to about $420 million worth of AOL stock that Gus Sauter, the Vanguard Group's human being behind the huge indexing machine, will need to buy. Sauter says in order to match the returns of the index closely, he won't start buying AOL until about 1 p.m. on Dec. 31. At 138 1 /2, AOL's closing price today, that would translate into about 3 million shares of the stock for his portfolio. With more than 25 million shares of AOL exchanged today (average daily volume is 14.7 million shares), he probably won't have a problem getting those shares, but he will have competition for them. After all, there will be about 100 other S&P 500 index funds trying to get those shares at the same time, so chances are Sauter will be paying a premium. But in many aspects, that is simply the nature of the indexing game.

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