Springtime Budget-Busters -- Savings Experiment
How I Squandered My Inheritance at Age 18
In the wee morning hours just prior to the market opening I had given some thought to shorting AOL Inc. (AOL) on its first day as a newly independent company. Yes, that same company that owns Bloggingstocks.com and a multitude of other interesting Internet "content" icons (and some not yet so). However, I did not do it because it would have been too impulsive and that is rarely a good investment strategy.I was stunned that we changed our logo. And we changed it to what seems like a team of logos instead of one. That seems bizarre to me if you're trying to build a brand. It is also ironic since we are planning on making money on advertising, and we will be muddling our own brand.
As I write this the market will be open for another hour and the stock has been flat all day. It opened at $23.39 and is trading at $23.18 as I type away. I marvel at some of the data points like, no present P/E but a future P/E of 6.1: a seeming bargain. I think it would be interesting to interview the speculator that came up with that figure.
All the numbers on this first day are worthless. The price-to-cash flow of 2.61 combined with the projected P/E scream bargain, except for the small fact that the company
And if quality of management matters -- here is some inside information -- everyone I have dealt with, top to bottom, seems bright, hard working, and professional. As an independent contractor that does not write for a living and does not need this gig, I have been impressed.
The problem for Aol comes not from the talent or product, which are pretty well received in the market place, but from the continuous dilution on the ever expanding world wide web.
Update: AOL closed at $23.52 (down $0.15) and is up to $23.60 in after hours trading.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not have own any AOL stock at time of publication.
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Reader Comments (Page 1 of 1)
12-11-2009 @ 5:47AM
MyKisa said...
...maybe they will be able to turn things around and go in the opposite direction.....that long downward slide has been all to obvious
12-24-2009 @ 5:23PM
jordan said...
Aol was not flat. It was trading on a when-issued basis back in November. It opened at $27 and declined to just above $22, before trading above $23 on the day you mentioned. The forced institutional selling occurred long before you wrote this piece, in my view.