This week, I could fulfill a childhood dream of owning a share of Berkshire Hathaway.
When the company closes on its purchase of railroad Burlington Northern Santa Fe, Berkshire is expected to split its fractional Class B shares 50 to 1, for a dollar value so low that even I could buy them (not that I will)!
But how Warren has turned my once-lofty sights so pedestrian.
Spotting the anomaly of Berkshire’s outsize shares in The Wall Street Journal tables nearly 25 years ago is my first memory of the stock market. The shares stuck out by trading at low quadruple digits compared to double digit stocks for all other companies. This had the same impact for me as charting the price of the 1952 Topps Mickey Mantle baseball card: it had allure and mystery because it traded for thousands.
Well, now, to accomodate his “bet” on the American recovery, Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett is believed to be bowing to the gods of tax-efficient mergers and gobbling up the rest of Burlington Northern with cash and split-shares of Berkshire’s B Class. (And, eek, even a new issuance.)
Yes, the sanctity of the A Class shares will remain, but all of a sudden Berkshire Hathaway will count thousands to millions of new shareholders and may even snag inclusion in the S&P 500.
While I don’t fault this shareholder-friendly transaction, I can’t help think that Uncle Warren is going soft as he continues to plot his legacy as one of America’s greatest creators of wealth.
Just think of the example he’s setting for his shareholder-value proteges.
Would Sergey and Larry “do evil” and chop up Google shares for more tuck-in technology acquisitions? Could Microsoft dish out its tremendous cash hoard in a special one-time dividend?
Well, that once happened in 2003 after years of tech firms declaring that they were their own best stewards of cash.
So, with Buffett splitting Berkshire shares once again, could the sin of a dividend be next on Buffett’s bucket list?
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