Stock Splits
some of my stocks were known for splitting after they hit a certain price ceiling. Lately these stocks are 2 or three time that ceiling. Is there any market factor or government regulation that has halted the splitting of stocks?
Terry Says
The decision to “split” the shares of a company is made by the Board of Directors. It doesn’t affect the value of the shares you own: after a 2:1 split you just own twice as many shares at half the price!
A company may decide to split its shares to get a broader base of stock ownership; there is a perception that lower priced shares may be more attractive to individual investors.
But there is no hard and fast rule that a company “must” split its shares at any price. And no proof that it adds to stock performance.
Legendary investor Warren Buffett has never split the shares of his Berkshire Hathaway company– and it has been a great performer at a VERY high price!!
