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To: Chuzzlewit who wrote (97348)	2/11/1999 3:27:00 PM
From: GVTucker	Read Replies (2) \| Respond to of 176387

First of all, all of the split advocates can really only state one study that supports their contention that a split stock continues to perform well--a study by Ikenberry at Yale. And Ikenberry's study is flawed, IMO, because it doesn't adjust its database for a number of pertinent factors. There are far more studies that verify what is more logical--that a split is irrelevant to future performance. Even the current 'fad' of buying stocks on a split announcement has proven to be a very short lived effect, with no performance effect when more than a 1 day time horizon is measured. BTW, regarding this statement:<<If a split is so important, could you explain why BRK.A which has never split, trades at a premium to the companies it owns (whose stock does split)>> This statement is really a little deceptive, because BRK should trade at a premium to the public companies it owns, Buffett or no Buffett, because BRK also owns a large number on non-publicly traded companies. When private market value of those companies is included, BRK trades about where it should trade.

To: Chuzzlewit who wrote (97348)	2/11/1999 3:30:00 PM
From: edamo	Read Replies (1) \| Respond to of 176387

is it possible that the above average appreciation of an issue that splits is symptomatic of today's market....what is the cause and effect....do investors both small and institutional move a split issue up, because there is a perception and fore gone conclusion that it will rise?..perhaps it is the impact of the psychological effect and the incredible liquidity of the current market....thirty years ago there were few splits, primarily because of lower liquidity (busy day on nyse was 15m for all issues)....market couldn't absorb the additional shares...today they are consumed before the ink is dry on the stock certificate...point to ponder..please comment...

To: Chuzzlewit who wrote (97348)	2/12/1999 4:04:00 AM
From: On the QT	Read Replies (1) \| Respond to of 176387

Hi Chuzz, As usual you make strong points. All of which make sense to me. It seems to me that good stocks that split do so for the reasons we agree on. Good stocks that do not split are difficult by our agreed definition to call good stocks. They still could be good companies that have not performed well enough to split. I would be willing to bet that if we took the body of stocks that split and compared their stock performance against the body of stocks, that up to the point in time did not, we would conclude that at that point in time, the split stocks already outperformed those that did not. So going a year out taking each split stock that already started out outperforming those that did not, comparing those that split with those that did not, those that did, would most likely continue to outperform those that did not. It is the starting superior performance of the stock, identified by their split, against the body of stocks that include inferior performing stocks, that did not split, that probably accounts for the continued superior performance of those split stocks. Which is my "most likely statement" in my prior post on the subject and my point. The split is the result of the superior performance not the primary cause of the superior performance which is our agreed upon main point. The continuation of that performance may be enhanced by the split which is the intention of the management and Sivy's point. Sivy does add some additional input regarding dividends rounding up that purely goes to the split action and does in of itself provide a material benefit to the split. The fact that more shares are available does provide liquidity and opportunity for those large investors to trade comfortably. He does provide an additional advantage which I think is no longer valid. For instance, the odd lot avoidance was once a consideration. At one time there was an additional premium one had to pay for purchasing an odd lot, today with the advent of Internet trading this premium is non existent. Ideally, I would want to take the entire S&P 500 as the representing body of good companies, then of that body, take only those stocks that have split and compare the two over a long representative period of time. If we find that those that have split outperform those that did not split by 4%or more than we have at least that mechanical play. Hopefully this was done at least once and correctly in the several studies that Sivy refers to. I say even this with reservations. What if there are so many that split as opposed to those that did not that any practical use of the information as a mechanical play is diminished? That would be a pity! There is I think, a better study that will be more in line with our thinking. Now don't do the slowly I turn routine when I mention O'Neil, he does have a very widely followed and well received system for picking stocks called the CANSLIM method. It picks good companies and good stocks and is earnings based and subject to fundamental review. Applying the split theory to that base might prove insightful. Of course here too, if we are right that these stocks continue to do well primarily because of their past performances being successfully carried forward, we should see a high percentage of those CANSLIM selections also splitting their stock so we might find this a blind alley in terms of improving his CANSLIM by selecting those that did split but a breakthrough in eliminating the few that didn't! Here at least the remaining body of CANSLIM stocks can more readily be tracked for individual play. It is times such as this that I wish I had already possessed something like Omega's TradeStation to handle this stuff. Don't suppose our musings will find anyone in our audience who would lend some data input on this? Regards, QT