OTTAWA: It may be just another number but Wednesday the share price of the Royal Bank of Canada, the country’s largest corporation with a market cap of $145 billion, reached a milestone: it traded above $100. In the same week, Onex Corp. also traded above $100 for the first time. Having two issuers crack the ton in the same week is unusual because most companies tend to split their stock before it reaches $100. In fact, since March 13 1981, Royal has split its stock on four occasions: accordingly, in un-split terms Royal traded at $1,600 this week. Apart from 1981, it also split in 1990, 2000 and 2006. For its part, Onex, which went public in 1987, has split its stock on two occasions: in June of 1999 and June of 2000. Accordingly, the $100 reached this week translates, in un-split terms, to $400. Companies tend to split their stock because it allows greater participation by investors, particularly the average punter. In this way a board lot or the minimum amount that can be purchased is more affordable. (For shares above $1, a purchase of at least 100 shares is required.) And there is also an old investment theory that investors can do well if they buy shares of a company that announces a share split and holds them.
According to the TSX, 15 other companies have share prices above $100: Agrium; Canadian National; CIBC; Canadian Tire; Constellation Software; CP Rail; Dollarama; E-L Financial; Fairfax Financial; Intact Financial; Lassonde Industries; Molson Coors; Morguard Corp.; Premium Brands and George Weston Ltd. There are about 50 companies whose debentures trade above $100. South of the border, high priced shares tend to be more common than in Canada. Berkshire Hathaway is the poster child for not splitting its stock and for a high share price: it closed Wednesday at US$281,290. But Apple, the world’s largest company — with a market cap of US$825 billion — has no compunctions: in it’s time as a public company it has split its shares on four occasions with the most recent being in June 2014 when it split seven for one. A current share is now the equivalent of 56 original shares.
