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Split Decision

By - June 04, 2005

Will Google split its stock? Given its love of Buffet, probably not, says Bloomberg News. So does that mean smaller investors will be priced out of owning it? Yes and no. Yes, they probably can’t own it if if keeps going up – Buffet’s stock is at 84K or so – but they can always buy a fund that owns it. In other words, if Google does not split, it’ll end up being owned mostly by institutions.

Prices such as Google’s make it more difficult for individual, or retail, investors to buy and sell stock, according to David Ikenberry, a finance professor at the University of Illinois in Champaign.

“It’s clear that higher sales price equates with higher institutional ownership,” Ikenberry said in an interview. “At a certain level, the retail market gets priced out.”

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