Why AOL, Inc. Shares Jumped

Is AOL's pop meaningful? Or just another movement?

Jan 16, 2014 at 7:54PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AOL (NYSE:AOL) rose more than 11% Thursday after the company announced a joint venture with Hale Global to hand over the reins of Patch, its unprofitable 900-site local news platform.

So what: Under the terms of the arrangement, AOL will contribute Patch into a new LLC, which will be operated and majority owned by Hale. 

AOL shareholders, for their part, should be happy to cede control, considering their company has been unsuccessfully pouring money into Patch in an effort to make the platform profitable since acquiring it in 2009.

What's more, today's partnership shouldn't be particularly surprising, especially when we consider AOL CEO Tim Armstrong already asserted, back in November, that they were expecting Patch to "move to run rate profitability by the year's end through a combination of operational changes and a partnership model for operations or strategic alternatives."

Now what: The news has also unsurprisingly spurred at least two positive notes from analysts, including both CRT Capital and Cowen Group. And while shares don't look particularly cheap trading at 48 times last year's earnings and 22 times next year's estimates, I have to agree that, with Patch out of AOL's hair, investors are right to breathe a sigh of relief, as their company will finally be able to focus on its more promising core business.

If you though the Internet was big...
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Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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