Next Wednesday, Berkshire Hathaway
The rationale for the 50:1 split sounds shareholder-friendly -- that is, for small Burlington Northern shareholders. But what about current Berkshire Hathaway shareholders? Over the years, Berkshire Hathaway CEO Warren Buffett has written about share splits, and not in a favorable way. In his 1983 letter to shareholders, Buffett wrote, "Were we to split the stock or take other actions focusing on stock price rather than business value, we would attract an entering class of buyers inferior to the exiting class of sellers." Nearly a decade later in his 1992 letter, Buffett's view on share splits remained consistent, "... there is no way that our shareholder group would be upgraded by the new shareholders enticed by a split. Instead we believe that modest degradation would occur."
While stock splits are not uncommon -- S&P 500 components AmerisourceBergen
Call me old-school, but I like the four-figure share price. What do other Fools think? Will the 50:1 Berkshire Hathaway split morph the shareholder base into a fast-trigger trading crowd that will result in higher turnover of Berkshire B shares? Or will Berkshire see little change in its B share owners? Stay tuned for more Foolish analysis following the split.
More on Berkshire's recent acquisition and Warren Buffett:
Fool contributor April Taylor owns Berkshire B shares. Berkshire Hathaway is a Motley Fool Inside Value and a Motley Fool Stock Advisor selection. The Fool owns shares of Berkshire Hathaway. The Fool has a disclosure policy.