Who said a stock split wasn't good for your stock? Last week's 50-1 split of shares in Berkshire Hathaways' class B stock (BRK/b) helped set the stage for last night's announcement that S&P would add the stock to the S&P 500. As a result, the stock is trading up 5% in early trading. Factoring in today's advance, Berkshire Hathaway now ranks among the ten largest US companies with a market cap of nearly 170 billion dollars.
Given its size, the addition of Berkshire Hathaway to the S&P 500 is likely to cause some havoc on the index. With a likely weighting of about 1.1% in the index when it is added in February, index managers will be required to sell about 1.1% of their holdings in each of the index's remaining 498 stocks (BNI will come out of the index with Berkshire's acquisition of the company) in order to make room for Berkshire. As if investors didn't have enough on their plate already!
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