Volume for Priceline.com dropped 23 percent since the shares crossed $600 on Feb. 28, 2012, compared with the prior 12 months, according to data compiled by Bloomberg. The Norwalk, Connecticut-based travel reservation system is the highest- priced stock in the S&P 500. Regeneron Pharmaceuticals Inc., the Tarrytown, New York-based drug maker, closed at more than $100 a share in early 2012. Trading has averaged 925,000 shares a day since then, down from 1.2 million the year before.
Companies that avoid splits even when prices soar attract “high-quality” investors and encourage them to think like owners instead of traders, billionaire Warren Buffett said in a 1984 letter to Berkshire Hathaway shareholders. The Omaha, Nebraska-based company’s Class A shares traded above $174,000 yesterday. Class B shares were $116.57 after splitting 50-for-1 in 2010.
“Were we to split the stock or take other actions focusing on stock price rather than business value, we would attract an entering class of buyers inferior to the exiting class of sellers,” he wrote. “People who buy for non-value reasons are likely to sell for non-value reasons.”
Of companies trading above their last split price, consumer discretionary shares account for the largest group at 24 percent, Bloomberg data show. Industrials and health-care providers are the second- and third-most represented industries.
“There’s a certain cache to having high-priced stocks,” John Workman, chief investment strategist at Convergent Wealth Advisors, said in an Aug. 2 phone interview. His firm has more than $10 billion under advisement for clients. “Any of these ones that have high stock prices, the dollars being invested in these companies are so institutionalized.”