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So why doesn't Berkshire split?
Posted on 8/1/16 at 5:44 pm
Posted on 8/1/16 at 5:44 pm
Is Buffet screening his investors? Is this his way of ensuring only "serious" investors? Separating the wheat from the chaff, so to speak? Is he legally discriminating on who joins the club by keeping the share price out of reach of the common man? I often wondered about this.
4
Posted on 8/1/16 at 5:51 pm to tigerpawl
B shares baw
Posted on 8/1/16 at 6:19 pm to tigerpawl
He wanted investors to hold the shares for extreme long term, having such a huge share price made it more difficult for a investor to sell just a part of their holdings as it increased in value. There are a considerable number of people that literally have one share as part of a portfolio.
Posted on 8/1/16 at 6:54 pm to tigerpawl
Supposedly it's simply because he doesn't want to pay the army of bankers and lawyers to do it.
Personally I think he should though, increased liquidity raises the value of a company.
Personally I think he should though, increased liquidity raises the value of a company.
Posted on 8/1/16 at 9:15 pm to foshizzle
That doesn't make any sense. He paid them to issue b shares.
Posted on 8/1/16 at 9:17 pm to tigerpawl
quote:
Buffet screening his investors? Is this his way of ensuring only "serious" investors? Separating the wheat from the chaff, so to speak? Is he legally discriminating on who joins the club by keeping the share price out of reach of the common man? I often wondered about this.
Yeah, pretty much all of that. He purposely kept his stock illiquid so he would only attract sophisticated investors.
He wouldn't have created class B shares if he hadn't have been essentially forced to.
ETA: He also didn't want his shares bought by Mutual Funds, IIRC
This post was edited on 8/1/16 at 9:20 pm
Posted on 8/1/16 at 10:24 pm to southernelite
Yes, he's looking for long term investors. Partners, if you will. Not day traders.
As far as the comment someone made about liquidity increasing value, that's only in the case of stock market value, and really only in the case of an acquisition target. No one is buying out Berkshire, and Warren has said many times the only value he cares about is net book.
As far as the comment someone made about liquidity increasing value, that's only in the case of stock market value, and really only in the case of an acquisition target. No one is buying out Berkshire, and Warren has said many times the only value he cares about is net book.
Posted on 8/2/16 at 10:03 am to LSUFanHouston
Thought the reason was just to bifurcate voting rights. But any real institutional money has no problem with $200,000+ a share, and these are the investors that would cause trouble in any voting matter vs. the individual retail investor who usually just votes with management/proxy firms.
This post was edited on 8/2/16 at 10:04 am
Posted on 8/2/16 at 1:50 pm to raw dog
The class B is worth 1/1500 of the economic value of A, but has voting rights of 1/10,000.
The long time Berkshire loyalists hold the A and others who have mentally bought in to his method.
it's part of the succession plan. Buffet himself has like a third or more of the A, and therefore very decent voting control.
When Buffet gives shares to fulfill his charitable pledges he converts those shares to class B first.
Big institutional could not buy up enough A to wrest control the volume is super low, for example 250 shares is avg daily volume.
The long time Berkshire loyalists hold the A and others who have mentally bought in to his method.
it's part of the succession plan. Buffet himself has like a third or more of the A, and therefore very decent voting control.
When Buffet gives shares to fulfill his charitable pledges he converts those shares to class B first.
Big institutional could not buy up enough A to wrest control the volume is super low, for example 250 shares is avg daily volume.
This post was edited on 8/2/16 at 1:57 pm
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