Berkshire Hathaway Joins S&P 500
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The shares in Warren Buffett's company are finally part of a major stock index -- the S&P 500. After Buffett split the stock by one share for fifty, the "B" shares of Berkshire Hathaway (BRK-B
) now trade at $68, making them a possible purchase for retail investors. Buffett recently bought Burlington Northern (BNI
) which will disappear as a publicly traded stock when it becomes part of Berkshire in a few weeks.Berkshire shares have gone from being out of reach in price to becoming a darling of retail and small institutional investors. Before the spit the firms' B shares traded at $3,500, and since the split, Berkshire B shares have traded more than five million shares most days. In after market trading on January 26th, the Berkshire B shares traded up by 8% based on expected purchases by institutions that trade S&P 500 stocks. Meanwhile, Berkshire's A share class still trades around $100,000.
It is odd that Buffett now cares that investors of modest means can own stock in Berkshire. The shares of both of its stock classes have been priced out of reach for all but large institutions for years. Perhaps Buffett would like to have a broader shareholder base, although it is difficult to understand why.
Or perhaps in his old age, he would like to price some of his stock so that retail investors can share the wealth that comes from his extraordinary ability to pick the stocks that Berkshire buys and holds, which represents much of the company's value.