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Canaccord Genuity on Facebook, GE, and Dow Jones Industrials


Facebook is bashed by Barron's; GE wants to grow its mining equipment and services business; and Standard & Poor's may change the Dow Jones Industrial Average.

Dow Jones Industrials (INDEXDJX:.DJI): iComplicate.

According to The Financial Times, Standard & Poor's (S&P) is considering changes to the Dow Jones Industrial Average because the index is supposed to be a measure of US industrial titans and doesn't include three of the biggest US companies: Apple, Google, and Berkshire Hathaway (NYSE:BRK.A). Calls to shake up the Dow have been making the rounds forever. S&P expects to test investor interest for changing the Dow at its next consultative meeting with index users. Currently, there are only a couple of rules for selecting members of the Dow: Index constituents cannot include transport companies or utilities, and the editor of the Wall Street Journal must sit on its steering committee.

However, index watchers also note that adding Apple or Google (or any other high priced stock), would be difficult, given the way the index is calculated. The Dow weighs its 30 components based on the absolute price of their shares. Without a share split, Apple and Google would have large weightings in the index. Index watchers say the three most likely stocks to come out of the Dow are Alcoa (NYSE:AA), Bank of America (NYSE:BAC) and Hewlett-Packard (NYSE:HPQ). Earlier this month, UnitedHealth (NYSE:UNH) replaced Kraft Foods (NASDAQ:KFT) in the index. General Electric remains the only member from the Dow's original constituents.

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No positions in stocks mentioned.
Canaccord Financial and its affiliated companies may have a Corporate Finance or other relationship with the companies mentioned and may trade in any of the Designated  Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage herein.
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