Last week’s question and answer

Think of Butterballs and you should think of me. You don’t have to Hunt for my products. There are enough to make a Banquet, where Slim Jim can put down his Armour and keep his trim figure by making a Healthy Choice. Founded in Nebraska in 1867, I’m a top North American packaged food firm. Some attendees at my parties include Orville Redenbacher, Marie Callender, Peter Pan and Chef Boyardee. I rake in more than $14 billion per year. Butterball has been America’s top selling brand of turkey for more than 40 years. Who am I? (Answer: ConAgra)

Insurance needs

Financial advisers typically will urge you not to ignore important things such as insurance. It’s critical to make sure you have insurance — for your home, your health, your car and often your life. There are other kinds of insurance that can serve you well, too — such as disability insurance or long-term care insurance.

But not all insurance is equally valuable. Don’t be overinsured. Don’t buy insurance you don’t need. Consumer Reports magazine recently listed several kinds of insurance policies that most people don’t need. Here’s a recap of some of them:

• Mortgage life insurance. A cheaper way to pay off your mortgage if you pass on is through term life insurance.
• Credit card loss prevention insurance. Instead of forking over as much as $180 per year for this, bask in the knowledge that by law, your losses because of card theft are capped at $50 per card.
• Cancer insurance. For many of us, our regular health insurance plan will cover medical expenses related to cancer treatments. So don’t buy this unless it’s offering more than you have, at a reasonable price.
• Accidental death insurance. This costs around $600 annually, and you’re extremely unlikely to die via an accident. Term life insurance is a more logical investment.
• Involuntary-unemployment insurance. This is designed to make minimum payments on your credit card or auto loan debt should you become unemployed. A better bet is simply to maintain an emergency fund that can cover your living expenses for three to six months or more. Drop by our Savings Center at www. fool.com/savings for more guidance on how to invest such short-term money.
• Flight insurance. Sorry, but you’re extremely likely to survive every flight you take. If you’re concerned about premature death, look into term life insurance.
• Life insurance. Even this can be unnecessary for some. If you’re single and childless, for example, and no one depends on your income, skipping it may be best.

Learn more about insurance and choosing it well at www.consumerreports.org, www.fool.com/insurancecenter and www.iii.org.

Split over splits

I beg to differ with you on stock splits. I owned 8,000 shares of Qualcomm until last week. I now own 16,000. The stock went up $1 this week. That amounts to $16,000 profit as opposed to the $8,000 I would have normally made. I’ve made much money due to stock splits. This is why I would not invest in (Warren Buffett’s company) Berkshire Hathaway. Why should I spend $2,800 for one share to make $1 if the stock goes up $1 and I own only one share? Please rethink your advice. — Beverly C., Las Vegas

We stand by our position. While less expensive stocks might go up or down by $1 in a day, Berkshire Hathaway’s $2,800 “class B” shares tend to move in much bigger increments — recently $58 in one day, for example. The class A shares, trading around $83,000 each recently, can go up or down by more than $1,000 in a day. If your Qualcomm shares went up $1 after a 2-for-1 split, they likely would have gone up around $2 per share before the split. Think in terms of percentage, rather than dollar, changes when tracking stock movements.

If a company never splits its stock, that doesn’t mean it won’t keep growing its business, making each existing share worth more and more over time.

Splitting the shares will lower the price of each share, but it will lower the value, as well. It can be exciting to own more shares, but it’s not the splits that are making you richer. It’s the performance of the company.

Where can I access the quarterly and annual earnings reports that companies file with the SEC? — F.W.Q., Lexington, Ky.

Try www.sec.gov/edgar.shtml or http://quote.fool.com.

Intel’s extreme makeover

Beleaguered Intel (Nasdaq: INTC) is trying to right its ship. Its board recently announced that Paul Otellini, president and chief operating officer, would succeed Craig Barrett as chief executive officer in May. Former CEO Andy Grove will become a senior adviser.

The board also approved the repurchase of 500 million shares of stock. That would cost more than $11.5 billion at recent prices. Intel’s quarterly dividend was increased from 4 cents to 8 cents per share, for a dividend yield of roughly 1.38 percent. With the Standard & Poor’s 500 yielding 1.60 percent, this isn’t a market beater, but it’s a vast improvement from prior levels. It’s also the second time Intel has raised its payout this year.

Share buybacks could more than offset the dilution of share value that comes with the issuance of stock options, and they could boost earnings. But buybacks and dividend increases can’t obscure the chip maker’s execution problems and inventory woes. Plus, the market for chips remains anemic and is expected to see little growth next year.

Still, give Intel its due. The board is calling for buying back stock near 52-week lows, is turning to fresh blood at a time when it’s needed most, and is using its cash hoard very effectively. That’s smart management and deserves a polite golf clap. Just don’t forget that Intel’s extreme makeover also is a product of its own extreme blunders.

Tight stops

A few years ago, I bought 400 shares of Hansen Beverages (a local company) at $5 per share. I watched it move between $3 and $6 for several years, and then it suddenly rose to about $14. To protect my gains, I placed a stop-loss order to sell the shares if they fell to $13.50. They did get sold, at $13.35, but the stock proceeded to rise, recently trading around $28 per share. I learned not to place stops so “tight.” — Irving Kasow, Lake Elsinore, Calif.

The Fool Responds: Stop-loss orders can be useful, but you’re right — setting them too close to the current price can kick you out of a stock you may want to hold. Even if you had set the sell price significantly lower, perhaps at $10, strong volatility in the stock might have triggered a sale. It’s best to keep on top of your holdings so that if they begin falling in price, you can quickly determine whether it’s due to a short-term fixable problem or a more vexing, lasting one. It’s often profitable to hang on to solid, growing companies through volatile periods.