For the second time in nine weeks, Prince Al Waleed Bin Talal Bin AbdulAziz Al Saud's royal billions have boosted a few stocks, but every time he steps in to buy a bargain, the question gets asked: how good is he?
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Others in the past have pointed out the Prince's mutts, including Planet Hollywood (OTC: PLHYQ), Trans World Airlines (NYSE: TWA) and Saks Holdings (NYSE: SKS). Some of his privately-held holdings, like Teledesic, remain wait-and-see propositions. His stalwarts such as Motorola (NYSE: MOT) and News Corp. (NYSE: NWS) have done little more than track or slightly underperform the Nasdaq Composite Index over the last couple of years. And the stock that initially drew U.S. investors' attention to the Prince, Citigroup (NYSE: C), has trailed tech high-fliers for the last three years.
But overall, you can't reasonably complain about the Prince's record. Apple (Nasdaq: AAPL) has nearly sextupled since he bought in. Motorola and News Corp. may have "merely" tracked the Nasdaq for the most part, but they've far outpaced the broader S&P 500.
If nothing else, the Prince has demonstrated some skill in buying at the right time; that is, picking a bottom. Among his most recent buys, America Online (NYSE: AOL), Compaq Computer (NYSE: CPQ), Priceline.com (Nasdaq: PCLN), Amazon.com (Nasdaq: AMZN), Xerox (NYSE: XRX) and Doubleclick (Nasdaq: DCLK) are all even or higher compared to a month ago. Eastman Kodak (NYSE: EK), Internet Capital Group (Nasdaq: ICGE) and eBay (Nasdaq: EBAY) remain below the water line, but the last two have been rebounding lately.
To be sure, much -- maybe even most -- of these stocks' recovery was fueled by the Prince's own buying. Nonetheless, it's an encouraging sign.
Then there's the most telling figure of all: $20 billion.
That's the total estimated net worth of the Prince these days. Assuming the guesses are fairly accurate, his worth has roughly doubled over the past three years. Most investors only dream of that kind of performance.
Good things come to those who hang around
If news reports about Lycos (Nasdaq: LCOS) and Terra Networks (Nasdaq: TRRA) are true, David Wetherell should wearing a big grin.
Market reaction to last year's proposed merger between Lycos and assets of USA Networks (Nasdaq: USAI) convinced the chairman and CEO of CMGi (Nasdaq: CMGI) to lead a shareholder movement that ultimately killed the Barry Diller deal. A little more than a year later, Terra apparently will offer 1.7 shares for every Lycos share, which equates to a price of $93.29 per share as of early this afternoon.
Not only is that a premium to Lycos' current price, it's also 39 percent higher than the stock's pre-Diller peak of $66.97, on a split-adjusted basis. Few Lycos shareholders would be unhappy with that.
This is also a much easier deal to understand: Terra shares for Lycos shares, full acquisition, end of story. The valuation straightforward (with a price collar, according to reports) and Terra remains an Internet pure play, unlike the USA proposal had Lycos merging with a myriad of media properties to create a new entity.
Judging by today's action, the market believes a Terra acquisition of Lycos would spur interest in Terra's main rival, StarMedia Networks (Nasdaq: STRM). But what would be the point?
You might be think another telco giant, one of the rivals to an AT&T (NYSE: T) or Terra's biggest shareholder, Telefonica SA (NYSE: TEF), could buy StarMedia. But why would they want to, especially at a high price? Assuming that a large appeal would be entry into the United States, StarMedia isn't the best property you could buy. Yes, the company gets you a window to U.S. Hispanics, but a large part of Lycos' appeal for Terra is the entire U.S. footprint, not just one ethnic segment.
The main global rivals for Terra -- AOL comes to mind on the ISP side, Yahoo! (Nasdaq: YHOO) on content -- already have that total reach into the U.S. market, obviously. And they've shown an inclination to compete on their own with Terra in the Spanish- and Portuguese-speaking world, rather than looking for an acquisition. After all, if they wanted to buy StarMedia, they could have done so before. 22GO>