Berkshire “B” Shares To Split 50-To-1

Lost in today’s news that Berkshire Hathaway (BRK-A) (BRK-B) was acquiring Burlington Northern (BNI) was the announcement that Berkshire’s “B” shares, or, commonly known by investors as the “cheaper” shares, would be split 50 to 1.

It is rare to see a stock split for either the Berkshire “A” shares or the “B” shares. Over the years, Warren Buffett has resisted calls to split the stock.

The “A” shares have long been out of reach for nearly everyone except professional investors. In the past 52 weeks, those shares traded in the range of $70,000 to $119,000 per share.

The “A” shares are obviously not very attainable for most investors.

Many investors turned to the “B” shares but even those “cheaper” shares traded in the range of $2241 to $3969 in the last 52 weeks. Again, for many investors, owning a share of Berkshire was likely out of reach.

Berkshire’s board voted for the 50 to 1 split in the deal to acquire all of Burlington Northern with 60% cash and 40% stock. It would transform Berkshire’s “B” shares into a price that most investors can afford.

The stock split, however, is still subject to shareholder approval. If split today, the B shares would trade around $66 per share.

[In full disclosure, the writer of this article owns shares of Berkshire "B" shares.]

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Comment by Real Estate Attorney

2009-11-03 19:51:55

If this deal goes through, it might be the first totally private ownership of a major American Railroad in the history of this country

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