AOL Shareholders Support Management, Sell Stock – Deal Journal – WSJ

AOL Shareholders Support Management, Sell Stock – Deal Journal – WSJ.

Shareholders have supported AOL management but apparently aren’t thinking the team can do much for value.
Nader Nazemi

Bloomberg News

After voting in AOL’s current board, shareholders are now selling out of the stock. That’s a confusing message of both affirming the company’s strategy instead of activist investor Starboard Value’s plans, and worrying about the future.
Shares are off 7.1% to $25.18 in recent trading, its lowest price in over a month. The volume of shares that have been traded is more than double the daily average.
On CNBC, AOL CEO Tim Armstrong called the shareholder vote an “absolute underpinning of our strategy,” and dismissed the share price drop-off to “special situation” investors trading on the morning’s news.
It seems as if shareholders that thought Starboard could make drastic changes are bailing out. And for Starboard, it is a loss after a string of victories.
What’s next for them, the activist shareholder has yet to say, but Wells Fargo analysts expect Starboard will reduce its 5.3% stake.
Given “the firmness of its conviction that management has pursued a failing display investment strategy, we would expect a reduction in its position,” Wells Fargo said.
But even on the losing end, Starboard doesn’t have much to complain about–AOL shares have gained around 68% since the start of the year, thanks in large part to the $1.06 billion patent sale Starboard says it initiated.
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