Berkshire Hathaway "B" Shares May Become Affordable

Warren Buffett

Exciting news for those of us who don't have the $3K to pony up for a single share of Berkshire Hathaway Inc. (NYSE:BRK.B), Warren Buffett may do a 50 to 1 stock split which would price the Class "B" shares at around $66.  Sorry, Berkshire "A" shares (BRK.A) will still fetch $100,000.

Nov. 3 (Bloomberg) -- Berkshire Hathaway Inc.’s planned 50- for-1 stock split will put its Class B shares within reach of investors Warren Buffett once called an “inferior” class.

The proposed split, announced today as part of Berkshire’s takeover of Burlington Northern Santa Fe Corp., would push the price of each Class B share to $66.51 from $3,325.35, data compiled by Bloomberg show. Buffett created the equities in 1996 by dividing Class A shares by 30 to prevent fund managers from carving them up in trusts and selling lower-priced interests. The B shares have never traded below $990.

Even with the dual share system, Berkshire’s price has effectively prevented many smaller investors from owning shares in the company outright. While the split may boost attendance at annual meetings and make Berkshire eligible for more indexes, Buffett warned 25 years ago that it might also misalign the goals of the company and its investors.

“Were we to split the stock or take other actions focusing on stock price rather than business value, we would attract an entering class of buyers inferior to the existing class of sellers,” Buffett wrote in his 1983 annual report, when the Class A shares traded for about $1,300. “Would a potential one- share purchaser be better off if we split 100-for-1 so he could buy 100 shares? Those who think so and who would buy the stock because of the split or in anticipation of one would definitely downgrade the quality of our present shareholder group.”


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