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To: Chuzzlewit who wrote (23)	2/1/1999 7:01:00 PM
From: Joe E.	Respond to of 419

One of the things that a number of people have been saying about AOL, and other internets is that who knows what they will be into in ten years. The AOL acquisition today makes me think that one of the reasons for people to buy these stocks is to buy into the investment adventures of the managements. One of the things that most of us would agree upon about AOL management is that they "get it" with respect to the internet, and probably with respect to the future of online. I for one am not so sure that this is true of the management of GE, GM or the other Generals. For example, Lycos is now probably too expensive to be bought out by anybody except one of the internet giants. And who thinks that the management of Time-Warner or Exxon or Viacom "gets it" enough to make a profitable investment in the internet arena?? OK, this is straying from the numeric, but one measurement of the faith that investors have in managements' ability to understand the future shape of the economy is how much of a premium investors pay over the value of comparable assets under a specific management's control, given their historic industry and company growth rates, free cash flow, etc. For example Berkshire-Hathaway trades at a premium to the assets under control, for obvious reasons. Limited, many conglomerates, closed end funds and a number of other companies trade at a discount to the assets they control, for various reasons, but clearly investors in general think that these managements are not tuned in to the future economy enough to be adding value. Since AOL "gets it", investors figure their acquisitions are probably going to be adding more value to AOL than the amounts AOL is paying for the acquisitions, because of synergies. Investors are paying AOL to manage their money. AOL just gave one half percent of my stock (and theirs) to the owners of MovieFone, because AOL management thinks that this will generate more money than using the money another way. Investors may be paying for the aura associated with success, but if the management really does "get it," the investments management makes will be great. An example of this is that a lot of people invest right along with billionaires, for example along with Phil Anschutz when he created Qwest. This is because people trust the billionaires to be great investors (how else did they get so rich)? Such a success premium can be quantified, although I have not done so.

To: Chuzzlewit who wrote (23)	2/1/1999 8:33:00 PM
From: larry	Respond to of 419

CTC, This is definitely very interesting and I think that Joe's analysis summarized the issue pretty well. This is a nice move on AOL's part IMHO. BTW, I kind of noticed that investors are doing 'an issue rotation' these days. The hot money has withdrawn from YHOO! and AMZN and been put into first MSFT, AOL, CSCO, INTC, and then in these past several days, DELL. Talking about DELL, I have a major complaint against the MMs. I own a bunch of DELL leap puts that I sold a while ago. When DELL shot up about 15 points during the last two sessions, how the hell that the DELL 2000 80 puts premium remain the same? My leap calls have nearly tripled on the value in the last 5-7 sessions while I only made a meager $$$ on the puts I wrote.:( I don't like the situation at all. I have also received several mails complaining my bearish attitude toward AOL. I have no time to answer all the mails...but AOL is my largest long position, followed by DELL, MSFT, and then CSCO. Sometimes I box against my long positions with shorts. Hope that it can clear some misunderstanding. BTW, what's your take on AMZN? I think that it's consolidating with short term look bearish. The reduction in short interest probably scared away some momentum players. But I firmly believe that traders will bid the issue sharply higher again down the road. They can't find a better trading stock than AMZN. good luck, larry!