Warren Buffett famously doesn’t believe in share splits. If you want to buy a single A class share in Berkshire Hathaway it will cost you $US109,750. Buffett’s modest house in Omaha, which he first moved into way back in 1958, is worth about six of his shares.
Australian companies have no such problem, although share splits to keep the price of a single share down are becoming less popular with time. That trend, when combined with the record-breaking share market run, means we have four blue chip stocks which are closing in on the magical $100 mark, although no stock has yet cracked $90.
Rio Tinto got to a record high for an Australian stock of $88.10 in May last year but Macquarie Bank topped that for the first time with yesterday’s intra-day high of $88.62. The market is down this morning on the back of Wall Street, but here’s where the four members of the $80-plus club closed yesterday:
Macquarie Bank: $87.50
Rio Tinto: $83.50
Perpetual, Macquarie and CSL were all trading at below $10 a decade ago, so their performance has been quite remarkable.
A couple of other stocks would be up there but for a specific circumstances. BHP would be more than $100 if it hadn’t embarked on the folly of merging with Billiton and also demerged its two steel businesses, Onesteel and Bluescope Steel. Similarly, pokies giant Aristocrat would be north of $60 if it hadn’t done a four-for-one share split in May 2000.
The only other companies to have cracked the $50 mark are Commonwealth Bank, Cochlear and Incitic Pivot, although ASX is getting closer by the day.
The trend with big floats remains to pitch them at very low levels, perhaps in the hope of deluding punters that they are cheap. Boart Longyear might have been a harder sell at $20, rather than $1.85, although it’s interesting that Kerr Neilson has opted for $5 with the forthcoming Platinum float.