Small Investors, Rejoice: Berkshire Hathaway Stock to Split 50-to-1

Have you been itching to invest in Warren Buffett's Berkshire Hathaway (BRK.A) (BRK.B), but didn't have the $3,400-and-change it would cost to buy a single Class B share? Now's your chance.As expected, shareholders in Berkshire Hathaway have approved a 50-to-1 split of the company's Class B shares, meaning the price of the stock will drop to about $67 a share on Thursday from a current face value of about $3,400. The share split is tied to Berkshire's planned purchase of Burlington Northern Santa Fe Corp. (BNI).

Berkshire introduced the (relatively) lower priced Class B shares in 1996 in order to allow smaller investors to gain entry to the company. The Class A shares, which won't split, currently go for about $103,000 a pop.

The high price of both classes of stock have helped protect Berkshire from what Buffett calls "inferior buyers," since the cost of a single share made the stock difficult to trade rapidly and proved too pricey for most retail investors. But at $67, the Class B shares will likely see large increases in both volume and volatility.

The split was necessitated by Berkshire's November agreement to buy the 77% of Burlington Northern it doesn't already own. Berkshire is paying $100 a share, with 60% in cash and 40% in Class B stock. By splitting the stock, Berkshire is essentially breaking a large-denomination bill into a big pile of small change to simplify the stock portion of the purchase.
Read Full Story

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.