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Author: peterxyz Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 211794  
Subject: MSCI Provisional Indicies Date: 5/20/2001 8:01 PM
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according to http://www.msci.com/provisional/provind_const.pdf

Berkshire Hathaway doesn't seem to be in the new MSCI Provisional indicies. These are float weighted, so that WEB's holdings shouldn't be a problem - so it is an interesting omission & perhaps significant in terms of the likelyhood of Berkshire's inclusion in the S&P500.


peter xyz
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Author: HamletsMill Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48002 of 211794
Subject: Re: MSCI Provisional Indicies Date: 5/20/2001 8:45 PM
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Berkshire Hathaway doesn't seem to be in the new MSCI Provisional indicies. These are float weighted, so that WEB's holdings shouldn't be a problem - so it is an interesting omission & perhaps significant in terms of the likelyhood of Berkshire's inclusion in the S&P500.


Lack of representation will always keep BRK out of the major indices. The float is simply far too small in relation to market capitalization.

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Author: peterxyz Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48003 of 211794
Subject: Re: MSCI Provisional Indicies Date: 5/20/2001 8:53 PM
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HamletsMill writes;
Lack of representation will always keep BRK out of the major indices. The float is simply far too small in relation to market capitalization.

If you read my post, you'll see that I note that the Provisional Indicies are float weighted. This means that a company which has 1/3 of it's shares held in strategic stakes, etc will have it's weighting in the indicies at only 2/3 of it's capitalisation.

The situation which Berkshire is in is commonly faced by those putting together these indexes (eg, in many countries, the dominant teleco is a very significant portion of the index & has a substantial portion still owned by the state) thus one of the reasons for this change. IMHO this would have been the idea opportunity to include Berkshire.

peter xyz

ps: does anyone have the comparable Salomon Smith indicies? Could you tell us whether Berkshire in in those?

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Author: HamletsMill Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48006 of 211794
Subject: Re: MSCI Provisional Indicies Date: 5/20/2001 9:36 PM
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Float weighted is immaterial if the total number of shares and daily volume is too low to match the prospective demand should the stock be added to an index.

If, for example, BRk.A was added -- float weighted -- to the S&P500, Vanguard would have to buy over 5500 shares just for VFINX.
It could be done, but it would extremely difficult and costly -- and a market specialist's nightmare.

Again, lack of representation, both in the size of the float and in the trading volume.

Besides, what does it matter if the stock isn't in an index? It has little bearing on current value, or long term appreciation.

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Author: peterxyz Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48013 of 211794
Subject: Re: MSCI Provisional Indicies Date: 5/21/2001 12:53 AM
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Hamlet,

1. I was responding specifically to your comment "The float is simply far too small in relation to market capitalization." - I think we're in agreement that the float weighting of the index avoids this specific problem.

2. On trade volume I agree 100% - this is one reason why I keep an eye on it - one day, maybe not today, maybe not tomorrow, but some day - we'll go to get a quote and discover that the price has gone crazy because it's been added to another index (it is already in at least one international index)

3. Desireability - I'm with you here too - I'd far *far* prefer that it remained outside the indicies. I think, however, that one day Berkshire will end up in the 500, unfortunately.

peter xyz

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