Now here's an eye opener. Warren Buffet's Berkshire Hathaway (BRK.A) has decided to split its shares 50 for 1. This would drop the price of the company's cheapest stock down from about $3,247.00 per share to $65. The class A shares, never split, still trade at about $97,500.Buffet has long opposed splitting the stock for fear that a lower share price would attract "inferior buyers." If the stock split is approved, it would attract a broader group of investors and even short term traders. It would make Berkshire (BRK.A) eligible for membership in the S & P 500 index.
Part of the motivation for the stock split is practical. Buffet needs wider participation to raise the needed capital for his purchase of Burlington Northern (BNI)
People who admire Buffet's philosophy now will be able to buy into the Berkshire mystique.
Would you buy Berkshire after the stock split?
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Reader Comments (Page 1 of 1)
1-19-2010 @ 1:53PM
rwferran said...
I bought some BRKA shares last Friday on the rumor of the stock split. I expect it will turn out well over the long term. Will probably do future dollar cost averaging buys.
1-19-2010 @ 2:10PM
e.krabs said...
To me, the stock split itself is a superficial change compared to the acquisition of BNI. I think he's making a powerful statement about the potential future of energy.
1-19-2010 @ 2:43PM
Bob Saget's Henchman said...
I bought some Berkshire Hathaway B shares today for the long-term haul. Though, I think that opening up the game to day traders will have a positive effect on Berkshire B.
With smaller valued stock and smaller splits you will hardly ever see much of a change in value after a stock split.
But I think with something as prolific (and expensive) as a share of Berkshire B this will mean nothing but good things for Berkshire B holders.
1-19-2010 @ 6:57PM
Iridium said...
By splitting the shares to the point that it becomes an easy buy for daytraders as well as opening the shares to the speculative market Buffet knows this will double the value of each share very quickly.
Buffet knows he doesn't have much time left so he is trying to raise as much capital as possible before he passes away so he can complete his masterplan by bringing as many of the corporations he has had eyes on for the past 30 years or more in the Berkshire group.
In the short term this may be a very good play but not for the long term. The long term prospect for the economy is still very grim. Over the next few years merger mania will once again reach a fever pitch and competition will be toast. We are already witnessing the consequences of the total lack of competition in nearly every sector of the global economy. Within ten years the average citizen will not be able to afford to live in any developed nation. We are not very far from one bank, one retailer, one insurance company, one builder.
It is the legacy of Buffet, Soros, and the other great manipulators of wealth. We will forever be slaves to their greed and have to live under and purchase goods from the massive corporations and political entities they created. It is their Great Pyramid.
1-19-2010 @ 8:29PM
John Doe said...
I wonder after the Stock split will the new investors be able to attend the Berk Conference in Omaha.
B shares investors where able to attend if they choose too.
But with them opening up the Owner ship to allot of investors that would of never invested before they will not have the room to hold all the new people.
I know the price of the stock will double after the first day, when it was first introduced it went from 1500 a share to 2000 in a matter of days.
Look at BNI after the announcement of the purchase of the railroad it doubled in price. So any purchase of the stock now is only going to make money. It may be short term but still it going to happen.
I think he should of left the B alone and did it with the A stock and brought the cost down to 100 to 200 share.
Those investors would be happy with the results, But then again either one will see some big gains.
I think most know Bill Gates has most of this money invested in B shares so he will makes out very well with this split.
1-19-2010 @ 11:57PM
Cynical Investor said...
Bought it last year in November
I knew about the split but the main reason is here:
www.thecynicalinvestor.net/2010/01/lost-decade.html
In a nutshell it was a Lost Decade but apparently not for Buffet.
1-20-2010 @ 12:05AM
Cynical Investor said...
Actually it is 'Buffett' with double 't' not 'Buffet'.
I thought initially that I misspelled the name in my blog - sacrilege :) .
1-20-2010 @ 1:08AM
alto5 said...
A berkshire B share value is based on what the A share value is; now a B share is about 1/30 of an A share's figure. What I can't figure is how a split B can change in value, unless the A share value changes. I own a few B shares so this interests me.
1-20-2010 @ 11:13AM
mgpenains said...
When is the stock scheduled to split?