Could do this research on my own but I bet someone here will know the answer. In closing the BNI deal, Berkshire is going to split their B shares 50-1, such that they will now trade around $65. This has prompted speculation BRK could be added to the S+P 500. 2 questions: Would a split BRK.B be a real candidate for index inclusion? Is there enough of a valuation spread between the A and B shares to make buying the B shares worthwhile? Having not done any work on it, I would assume the B shares trade at a slightly higher valuation due to liquidity, although perhaps this is undone by the lack of voting rights.
Really guys? This is the only decent thread out there.
We had B shares in our SMEF (student managed endowment fund) and we actually bought more 4 years down the road. They are excellent shares for someone who can’t pony up the 100k or whatever it is for A shares. I am pretty sure A shares will hurt probably due to Berkshire prestige value being destroyed a little but a good move nonetheless.
WSJ had an article on this today, S&P didn’t want it before due to lack of liquidity, I think people are hoping liquidity will appear with a smaller share price. I know for a while there was a 3% spread between the shares. I can’t imagine this would get much wider because A shareholders have conversion rights. So someone holding A can get their shares turned into Bs and get the premium. B shares hold no conversion rights, although if you had enough you could sell the shares for a premium and buy an A.
I’m more interested to know what would happen to the share price once Buffett and Munger hit the dust.
if you read old interviews, he says to buy the day he dies because he knows his head has a premium on it and when he croaks the stock will drop. the businesses are good. though, i think he has a few duds in his portfolio. the newspapers he owns are probably worthless.
I imagine the liquidity for the B shares will skyrocket if they’re split 50-1. There’s currently no spread on A vs B. As of today they’re $70 off (A vs 30xB), so the ~6x extra voting rights of an A share aren’t trading at a premium.