Apple: Too Big For The Dow, Bullet Dodged, Says Bespoke

Part of what may be propelling Apple (AAPL) to new highs today — it is up $2.89, or 0.6%, at $414.52 and hit $422.86 at one point — is speculation the company may be added to the Dow Jones Industrial Average, which would, of course, have the effect of boosting representation to some funds keyed to the Index.

But the folks at Bespoke Investment Group this afternoon throw cold water on the notion. The Index is weighted by share price, they point out. And Apple is simply too big, they assert, at the current price:

“Given that AAPL is trading above $400 per share, if the stock were added to the index without a split in the shares, it would have a disproportionate weight in the index, making it more like the Dow Jones Industrial Apple!”

Not a bad idea for another index, perhaps…

This will be just one more reason some folks will suggest Apple split its stock, which would make it more feasible for it to have Dow membership.

However, Bespoke’s researchers suggest this may be dodging a bullet for Apple: Tech stocks tend not to do so well after entering the Dow:

While inclusion in the DJIA is considered a badge of honor for most companies, the history of how Nasdaq listed stocks have performed following their inclusion in the index is nothing to right [sic] home about. All three Nasdaq listed stocks in the index — Microsoft (MSFT), Intel (INTC), Cisco Systems (CSCO) — have declined since the time they were added to the index. If history is any guide, the last thing AAPL longs want is to be added to the DJIA.