Baby Berkshire split may put shares in S&P 500 Index

Market Watch ^ | 11/3/2009 | Alistair Barr

[bruinbirdman]

Trading volume of Class B stock will rise, meeting a benchmark criteria

Berkshire Hathaway Inc.'s decision to split its Class B shares could put the company in the benchmark S&P 500 Index, spurring a big round of buying by index funds, analysts said Tuesday.

Berkshire said its board approved a 50-for-1 split of its Class B common stock /quotes/comstock/13*!brk.b/quotes/nls/brk.b (BRK.B 3,325, +60.35, +1.85%) to help smaller investors handle the company's $44 billion acquisition of Burlington Northern Santa Fe Corp. /quotes/comstock/13*!bni/quotes/nls/bni (BNI 97.00, +20.93, +27.51%)

Berkshire Chairman Warren Buffett is notorious for his aversion to stock splits, saying such moves have no real impact and are more like slicing a pizza into smaller pieces. The company's Class A shares /quotes/comstock/13*!brk.a/quotes/nls/brk.a (BRK.A 100,450, +1,700, +1.72%) have never been split and currently trade above $100,000 each.

However, Berkshire created smaller Class B shares -- sometimes known as Baby Berkshire stock -- to keep investment firms away from smaller investors who wanted a piece of the action, but didn't have $100,000 to put to work. That stock is worth roughly one-thirtieth of the Class A shares.

When the latest split happens, the Class B shares will be even smaller. The Class B shares currently trade at $3,324. After the split, the price will drop to roughly $66. That will make the shares more accessible to smaller investors and will increase trading volume.

[bruinbirdman]

Warren Buffet anounced BH was going to buy Burlington Northern. The price includes BH stock. Buffet has never before paid for a company with BH stock.