The Wonky Reason the Bezos Divorce Could Shake Up Stock Indexes




 

(Bloomberg) -- Jeff and MacKenzie Bezos's split has created a puzzle for index investors: Who gets their stock in Amazon.com Inc.?

Regulatory filings show Jeff Bezos owns almost 79 million shares of the company, worth about $130 billion as of yesterday. If MacKenzie takes a chunk in a settlement -- or either party needs to liquidate their assets to meet divorce expenses -- those could become part of the company's freely traded stock. In turn, that could boost the company's weighting in indexes including the S&P 500 -- sending tracker funds on a small Amazon shopping spree.

"From the perspective of the index, you'd need to a sell a little of everything else and buy some Amazon," said David Dziekanski, a portfolio manager at Toroso Investments. "The equity markets will absorb any Amazon additional shares without much impact on price."

It's a speculative yet pertinent question, given that about $3.4 trillion is pegged to the S&P 500, and another $6.5 trillion uses the gauge as a benchmark. That's put the wonky methodology governing indexes like the S&P 500 center stage. The gauge uses a company's float, rather than the total number of shares outstanding, to determine its weight in the index, and it calculates the float by excluding shares owned by the company's officers and directors as well as individuals owning 5 percent or more of a company.

Amazon's allocation is therefore adjusted down to exclude Jeff Bezos's 16 percent stake. If MacKenzie Bezos walks away from the marriage with 24 million of those shares -- just under S&P's 5 percent threshold -- Amazon's float could grow, lifting the company's slice of the index and potentially generating an $6 billion reshuffling of investments from index trackers needing to bolster their positions.

But S&P methodology also excludes shares owned by "related individuals" of company officers and directors from its float calculation. The index provider declined to comment on whether that category would include ex-spouses, with a spokeswoman adding that the firm doesn't typically comment on individual companies.

More simply, the float could grow if either Bezos sells shares to raise cash. Because let's face it, even Amazon can't make divorces cheap.

--With assistance from Brian Welcher.

To contact the reporter on this story: Rachel Evans in New York at revans43@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Chris Nagi

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

COMMENTS

More Related News

Buttigieg Worries Tech May Add Racial Bias to Credit Decisions
Buttigieg Worries Tech May Add Racial Bias to Credit Decisions

Buttigieg, a Democratic presidential candidate, was responding to a black business owner who asked about the denial of capital to African Americans during the Black Economic Alliance Forum held jointly with Black Entertainment Television in Charleston, South Carolina. The event, held Saturday, will be broadcast Sunday on BET.

Under Fire, Trump Backtracks on Reporting Foreign
Under Fire, Trump Backtracks on Reporting Foreign 'Dirt' to FBI

"Of course you give it to the FBI" if warranted, Trump said Friday in a phone interview with Fox News. Special Counsel Robert Mueller discovered that a Russian lawyer approached Trump's son Donald Trump Jr. in 2016, offering damaging information from the Kremlin about Trump's Democratic opponent Hillary Clinton.

Trump Says He
Trump Says He's Not Going to Fire Kellyanne Conway

(Bloomberg) -- President Donald Trump said he won't fire White House adviser Kellyanne Conway following a government watchdog's recommendation she be "removed from federal service" for disparaging Democratic presidential candidates in her official capacity as a senior White House adviser.

Kellyanne Conway Should Be Removed From White House Job, U.S. Agency Says
Kellyanne Conway Should Be Removed From White House Job, U.S. Agency Says

Conway repeatedly violated the Hatch Act, which prohibits government officials from conducting politics while acting in their capacity as a federal employee, the independent U.S. Office of Special Counsel said in a report released Thursday. The agency has no enforcement powers and it would be up to President Donald Trump to discipline her.

U.S. Sees State Actor Behind Oil Tanker Attacks in Gulf Region
U.S. Sees State Actor Behind Oil Tanker Attacks in Gulf Region

(Bloomberg) -- An attack on two oil tankers near the entrance to the Persian Gulf was likely done by a state actor, according to a U.S. official, heightening tensions over a potential military confrontation between the U.S. and Iran. Oil prices surged.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.