Apple’s influence in major stock indexes will soon be fully unleashed

Warren Buffett’s Berkshire Hathaway’s sale of nearly half of its Apple shares in Q2 has come with a surprise silver lining for AAPL investors: Its influence in major stock indexes is set to be fully unleashed.

Lu Wang and Yiqin Shen for Bloomberg News:
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Apple’s weighting in a slew of benchmarks has been depressed for years because Buffett’s Berkshire Hathaway Inc. tends to hold its investments for the long run, making them unavailable for trading. As a result, index providers calculated the tech company’s weight based on a methodology known as float-adjusted market capitalization.

Put simply, Apple’s true value is not reflected in many indexes.

In percentage terms, the numbers don’t seem huge — in the case of the S&P 500, for instance, 94% of Apple’s value is currently considered. That should now increase to 100%, according to Piper Sandler & Co. But in a $3 trillion company, it adds up.

In the wake of Berkshire’s sale, passive funds tracking these indexes may now have to buy as much as $40 billion of Apple stock when they next rebalance, according to Piper Sandler’s estimates. That’s triple the average daily trading volume of the company’s shares over the past month.

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MacDailyNews Note: The S&P 500 is rebalanced quarterly, usually on the third Friday of March, June, September, and December.
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