~ OT ~ edamo...Here is an interesting review of a "Big Boy" deciding to lighten up on AOL. They don't hold onto these high flyers forever. A few months ago the Legg Mason Funds were one of the largest holders of AOL stock. They also still own a lot of DELL -- at least they did last time I checked <gg> .... FYI....
<<By Christopher Bowe
This story was originally published Tuesday.
CHICAGO (Dow Jones)--Legg Mason Funds president William Miller said Tuesday
that America Online Inc. (AOL) is overvalued.
Speaking here at the Morningstar Investment Conference's legendary managers
panel, Miller said AOL's stock market capitalization has approached its zenith,
if you place it in context with the U.S.'s biggest companies.
"It's now significantly overvalued according to our models," said Miller, who
oversees about $10 billion in assets, including the Legg Mason Value Trust.
If AOL's current $150 billion in market capitalization doubled, it would be
roughly the size of General Electric Co (GE). At $300 billion it would be right
behind Microsoft Corp. (MSFT), he said.
That seemed unlikely, so it was time to sell, Miller said.
After getting in early on AOL and watching its incredible price growth, Miller
said he has sold AOL shares over the last few months.
Looking for new technology, Miller said he's finding "a lot of value" in small
cap software companies.
Market share is a key factor when selecting a technology company. One of the
reasons AOL was so attractive for so long is because it had fought off many
challenges and still had 53% market share, Miller said.
Separately, Miller said fund managers often neglect to study their archrival
competition - Standard & Poor's 500 index.
Fund managers routinely study a company's competition or competitors' funds,
but sometimes forget to look at the inner machinations and makeup of the S&P
500.
The S&P 500 is considered the benchmark to which mutual funds are measured.
The S&P 500 is often updated where some stocks are replaced by new upcoming
ones.
Miller said the S&P provides a blueprint: winners stay on it a long time, it
has low turnover (40 changes last year), and they actively weed out the losers.
-Christopher Bowe; (312) 208-1093
(END) DOW JONES NEWS 05-04-99>> |
