Sit it out: If as a boutiques holder, you are becoming part owner (and partner to the current owners) of a business, I would not blame you, for refusing to buy stock in Google-like companies, because you are not being treated as a full partner. In fact, I am looking forward to seeing the full filing. In fact, what the stock split signals (to me) is that Google is planning more controversial (and debatable) big decisions in the future and they do not want to either explain these decisions or put them up for a fair vote. Perceptions: A stock split may change investor perceptions about future growth potential in both good and bad ways. The “splits are good” school argues that only companies that feel confident about future earnings growth will split their shares, and that stock splits are therefore good news. The “splits are bad” school counters that splits are empty gestures (and costless to imitate) and that companies resort to these distractions only because they have run out of tangible ways of showing growth or value added.
The “splits are bad” argument is based upon transactions costs, with the bid-ask spread incorporated in these costs. At lower stock price levels, the total transactions costs may increase as a percent of the price. At $325/share, Google will remain too expensive for some retail investors and the transactions costs and trading volume are unlikely to change much. The Google split: Since the split is a two for one split at a $650 stock price, there is not much ammunition for either side of the price level argument. The effect has been examined extensively and there is some evidence, albeit contested, that the net effect of splits on liquidity is small but positive. If you (the trader) want to increase your chance of earning then you should look at small cap investing. Where is the value in value investing? The Google split: Google’s intrinsic value does not change as a result of the stock split. The twist in this stock split, i.e., that the shares that will be created in the split will have no voting rights, is the more intriguing part of the story.
The maps were created by Abigail Fitzgibbon. Consequently, you could decide to avoid being investors in any company that has a dual-class structure for voting. Because of being FREE and NATURAL, I am able to expand and come out with many beautiful and wonderful strategies that many people thought it wasn’t possible but made possible by Ronald K. I am teaching all students just to expand their horizon, but I wouldn’t use it. I will focus on the stock split but use it to also make a couple of points about corporate control and earnings growth. These days, there’s lots of handy financial management tech out there that can help make this task a bit easier. In practice, though, investors often value low-vote shares based upon recent management performance/behavior, paying too high a price when managers are behaving and performing well and pushing down the price too low, after managers disappoint them.
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