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Greenblatt Breaks Even on AOL Patent Sale

April 10, 2012 | About:

AOL shareholders were pleasantly surprised to learn that Microsoft had purchased their patent portfolio for 1.06 billion.

AOL will continue to hold more than 300 patents and patent applications covering technologies it considers core and strategic, in such areas as advertising, search, content generation and management, social networking, mapping, multimedia and streaming, and security. AOL will license its remaining patents to Microsoft and, in return, Microsoft will license to AOL the patents it is buying.

For some AOL value investors including Joel Greenblatt, the patent sale was wonderful news. The stock jumped 43% today.

Greenblatt owns 76,187 shares of AOL and he is the largest well known guru who owns the stock. Unfortunately for Greenblatt, he scooped up most of his shares for $24 making this acquisition a break even proposition. The stock was hammered after he bought shares falling to less than $12 last summer.

It appears that Microsoft is doubling down in their efforts to catch Google (GOOG). Microsoft has teamed up with Facebook which many believed would purchase the AOL portfolio. Interestingly, Facebook also announced an acquisition today as they purchased Instagram for over $1 billion.

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