Some investors Tuesday found another justification for paying stratospheric prices for Internet-related stocks: rumors that some of the best-known Internet issues would be added to the blue-chip Standard & Poor’s-500 stock index.
That speculation helped push Internet search vehicle Yahoo Inc. up $8.50 to a record $148.06 and America Online up $5.13 to a record $106.25.
Inclusion in the S&P; means guaranteed demand for a stock from increasingly popular “index” mutual funds that simply buy and hold those issues.
After the close of trading, Standard & Poor’s Corp. did indeed announce changes in the S&P; 500. But the additions were Bear Stearns Cos., SLM Holding Corp., IMS Health Inc. and Capital One Financial Corp. No Internet stocks were added.
David Blitzer, chairman of the S&P-500; index committee, said it stands to reason that Internet companies will be added to the index sooner or later.
“Our view is that the S&P; represents leading companies and leading industries,” Blitzer said. “Given the size and growth of Internet companies, I think over time leading companies will include Internet companies.”
Ed Keely, manager of the $2-billion Founders Growth Fund in Denver, is leaving to join cross-town rival Janus Funds.
Keely, 32, will manage institutional money for Janus. Founders said it is searching for a replacement.