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Message
Berkshire Stock
Posted on 11/19/08 at 3:29 pm
Posted on 11/19/08 at 3:29 pm
A few questions.
Whats the difference between class A and class B stock?
Why is is so expensive?
Whats the difference between class A and class B stock?
Why is is so expensive?
4
Posted on 11/19/08 at 3:34 pm to barry
Class A (if that's the expensive one) has never split. It's so "expensive" (I dislike the use of the term in this example) because it has run up a shitload over the past 40 years of staggering returns that he has produced.
Class B is divided into smaller $ amounts to allow retail investors the opportunity to invest.
Class B is divided into smaller $ amounts to allow retail investors the opportunity to invest.
Posted on 11/19/08 at 3:41 pm to barry
AND NONE OF THEM HAVE PUTS. 
Posted on 11/19/08 at 3:41 pm to barry
Also note that the Bill Gates/Buffett foundation owns a ton of class B shares, but not class A. Just something to think about when investing (although not too many people can afford class A shares).
Posted on 11/19/08 at 4:13 pm to Ric Flair
CDS on Berkshire went through the roof this week. Not that I expect that they hold any water, just another signal of credit cramping up hard again.
Posted on 11/19/08 at 4:24 pm to barry
quote:
Whats the difference between class A and class B stock?
Class B was also set up with the purpose of allowing stockholders to gift shares to family for tax planning purposes...I think Class B has like 1/32 of a voting right of Class A
This post was edited on 11/19/08 at 4:25 pm
Posted on 11/19/08 at 5:47 pm to Putty
quote:
I think Class B has like 1/32 of a voting right of Class A
this is correct, also Class A shares can be converted at any time to 32 B shares for each A share. However you cannot convert 32 B shares into one A share. The company recommends that if you plan to buy B shares in bulk to just buy A shares instead.
ETA: The also take measures to ensure that the ratio between A and B shares stays as close to 1/32 as possible so people can't take advantage of the spread
This post was edited on 11/19/08 at 5:50 pm
Posted on 11/19/08 at 7:37 pm to Putty
quote:
Class B was also set up with the purpose of allowing stockholders to gift shares to family for tax planning purposes...I think Class B has like 1/32 of a voting right of Class A
This is not entirely correct. An A share can be traded in for 30 B shares, thereby forcing the value of the B share to equal 1/30 the value of the A share at all times due to arbitrage.
The B share has no voting rights.
Warren Buffett introduced the B share in the 90's because he heard that fund managers planned on setting up a fund that held only A shares and allowing investors to invest in the fund, thereby allowing those investors to have fractional ownership in the A shares. Warren Buffett did not like that idea so he beat them to the punch by introducing the B shares.
Buffett has never split his stock because he only wants long-term investors. He feels that splitting the stock adds no value and only makes it more attractive to shorter-term investors.
Posted on 11/19/08 at 8:31 pm to Nicodemus
Nicodemus, Buffet is correct. Dilution of shares does not add to investor value. One of the biggest mistakes an investor can participate in is buying after a split.
Posted on 11/19/08 at 8:34 pm to glassman
There is no dilution in a stock split...
Posted on 11/20/08 at 6:02 pm to glassman
quote:
Nicodemus, Buffet is correct. Dilution of shares does not add to investor value. One of the biggest mistakes an investor can participate in is buying after a split.
Not necessarily. If a split results in higher liquidity, the total value of all shares goes up. This is harder to do now though because people are no longer restricted to buying in "round lots" of 100 shares like they were back in the day.
Posted on 11/20/08 at 6:03 pm to Colonel Hapablap
quote:
AND NONE OF THEM HAVE PUTS.
Probably not much of a market for betting against Da Man.
Posted on 11/20/08 at 6:09 pm to foshizzle
quote:
Probably not much of a market for betting against Da Man.
i disagree... when Da Man goes all in with GS, WFC, and GE. (and, yes, I know GE is more of a bond relationship)
Posted on 11/20/08 at 6:51 pm to glassman
quote:
Dilution of shares does not add to investor value. One of the biggest mistakes an investor can participate in is buying after a split.
As much as I love the boxer.... how can a split cause dilution?
Posted on 11/20/08 at 9:14 pm to foshizzle
I would love to bet against him right now.
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