How an Apple Stock Split would impact ETFs

“Today Apple (AAPL), which we have mentioned recently as having a lofty 18% weighting in the Nasdaq-100 PowerShares QQQ and a 4.54% weighting in the S&P 500 and is the largest single component weighting in both indexes, has rallied more than 2.5% to as high as $611 on ‘rumors of a stock split and/or dividend,'” Paul Weisbruch writes for ETF Trends. “We are not focusing too much on the rumor of a ‘dividend’ but more-so the possibility of a stock split.”

MacDailyNews Note: There’s no rumor about it. It’s been know for months. Apple’s Board of Directors has declared a cash dividend of $2.65 per share of the Company’s common stock. The dividend is payable on August 16, 2012, to stockholders of record as of the close of business on August 13, 2012.

Weisbruch writes, “We will have to watch closely to see if the rumor specifically of a potential stock split does indeed have any truth to it, because an announced stock split would obviously help the folks at Dow Jones make a quicker decision in potentially adding AAPL to their index, on the basis that it would ‘work better’ if AAPL had a lower notional price. Thus, the price weighted index itself, the DJIA, would not necessarily be unduly influenced by the day to day action in AAPL if the stock were say “$60 (implying a 10 for one split). If this were indeed to happen from start to finish (i.e. rumor becomes truth, AAPL announces stock split, AAPL eventually becomes a Dow component at a fair ‘price’, i.e. $200 or less) there will indeed be money in motion for any indexes/derivatives and managers that are benchmarked if not directly invested in and/or linked to the DJIA. Thus, any upward price pressure in AAPL stock itself, would be felt also in the NDX (given the 18% and rising, current weighting), and for the same reasons, in the SPX (given the 4.54% and rising, current weighting).”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]


    1. The purpose of the buyback is to offset share dilution due to employee grants. Whether Apple bought back 1M shares at $600 or 10M shares at $60 wouldn’t matter. The effect would be the same.

      A stock split of about 10:1 would allow Apple to join the DOW and then all those institutions that benchmark on the DOW would have to buy some AAPL. Very good for us longs.

  1. Yes, like Apple is going to set a $2.65 dividend per stock and then do a ten for one stock split and give everyone 10 times the dividend.

    Where do the stock manipulators get their ideas and why don’t they think of the consequences of their foolish schemes?

    1. Pretty amazing. I think that’s the level of understanding most of these financial types are at.

      I know a very smart and successful finance guy (a real “forget the sex appeal, I only buy on the fundamentals” type of person) who won’t buy Apple because of the sex appeal. As I’m trying to explain to him, yes, Apple is sexy, AND they also have the best fundamentals out there. But no, can’t wrap his head around that.

      Financial crisis? I have no trouble understanding how we got into trouble.

  2. It doesn’t matter if AAPL is a $600 stock, or a $60 stock (with 10X the shares outstanding). An 18% weighting is still going to be an 18% weighting. It’s the growth in value of TOTAL shares, not the single share, that impacts weighting.

    The financial press are those that couldn’t make it in the finance industry, but they know how to write, so they do.

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