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Home / Business / In the Bezos split, index investors weigh a wonky $8 billion question

In the Bezos split, index investors weigh a wonky $8 billion question



"From the point of view of the index, you need to sell some of the rest and buy Amazon," said David Dziekanski, Toroso Investments portfolio manager. "The equity markets will absorb all additional Amazon shares without much price impact."

  The retail giant is also a giant in the stock market: the share price and Amazon's trading volume over the past 12 months.

The retail giant is also a giant on the stock market: the share price and Amazon's trading volume over the past 12 months. Credit: Bloomberg

It is a speculative but relevant demand, since about US $ 3 trillion of investments are linked to the S & P 500, and another $ US6.5 trillion uses the caliber as a point of reference.

This is the false methodology that governs indices such as the central S & P 500 stadium.

The tool uses the market value of a company and its free float (the number of shares available for trading ) rather than the total number of outstanding shares, to determine its weight in the index, and calculate the float by excluding the shares held by the officers and directors of the company, as well as people who own 5% or more of a society.

The Amazon allocation is then adjusted to exclude Jeff Bezos' 16% stake.

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If MacKenzie Bezos walks away from marriage with 24 million of those shares – just below the 5% threshold of S & P – the fluctuation Amazon could grow, raising the share of the company's index and potentially generating $ 6 billion ($ 8.3 billion) of reshuffle of tracker index investments that need to strengthen their positions.

But the S & P methodology also excludes shares held by "related persons" of officials and directors of companies from its floating calculation.

The index provider refused to comment on whether that category included ex-spouses, with a spokesperson adding that the company does not generally comment on individual companies.

More simply, the float could grow if Bezos sold the shares to raise money. Because let's face it, even Amazon can not make divorces cheap.

Bloomberg


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