Posts tagged Warren Buffett
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This is big news as it Berkshire Hathaway will be replacing Northern Santa Fe on the S&P 500.
It has been speculated that this may occur, but few were expecting this news this soon. Warren Buffett has been notified by Standard & Poor’s Indexes that Berkshire Hathaway Inc. (NYSE: BRK-B) will replace Burlington Northern Santa Fe (NYSE: BNI) in the S&P 500.
The change is still on a date to be determined.
The total float will have to be calculated out, but this will not likely be the full float nor the full market capitalization of Berkshire Hathaway that will be included in the S&P 500 Index because of the Warren Buffett and Buffett Trust stakes.
Berkshire Hathaway will also join the S&P 100 on a date to be determined. The merger is expected to be completed in February. That is what the recent stock split did for investors. We still think Buffett should consider adopting a similar stock split for the A shares, although at a smaller ratio. The B-shares closed at $68.00 today and shares rose by over 7% to $73.05 on 777,347 after-hours shares as of 5:49 PM EST.
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Warren Buffet has always thought about value rather than price. The value doesn’t only relate to a business or a stock. It also relates to people. In the past he refused a stock split for fear of attracting worthless traders rather than valuable investors as partners. Is Berkshire Hathaway suffering or is Warren Buffet trying to do his part to help the economy?
Berkshire Hathaway will hold a special shareholders meeting tomorrow (Wednesday) morning in Omaha to vote on a proposed 50-for-1 split of the company’s Class B shares.
Warren Buffett, who controls about a third of Berkshire’s voting rights, supports the move and it is widely expected to be easily approved.
Berkshire’s Class A shares, the ones that trade around $100,000 and give their owners voting rights, won’t be affected.
After the split, the price of Class B shares, often referred to as the Baby Bs, would go from around $3332 a share (tonight’s close) to somewhere between $66 and $67 a share. That would happen as soon as the split is made effective, which could be as early as Thursday.
The resulting increase in trading volume and liquidity may pave the way for the stock to be added to the benchmark S&P 500 index.
The lower entry price could also attract ’small’ investors who weren’t able, or were unwilling, to spend four-figures on a single share of stock. (That, in turn, may boost attendance at Berkshire’s regular annual shareholders meeting in May, since anyone owning even one share is entitled to attend the popular ‘Woodstock of Capitalism.’) –more
It’s reported that Warren Buffett’s Berkshire Hathaway will likely approve a 50-to-1 stock split tomorrow in order to finance the company’s purchase of Fort Worth-based BNSF Railway. That’s supposed to drop the price of the company’s Class B shares (now $3,247) down to about $65.
That would enable “inferior” investors to afford the stock. Here’s what Buffett wrote in 1984:
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. At $1300, there are very few investors who can’t afford
a Berkshire share. Would a potential one-share purchaser be
better off if we split 100 for 1 so he could buy 100 shares?
Those who think so and who would buy the stock because of the
split or in anticipation of one would definitely downgrade the
quality of our present shareholder group.
Buffett must believe in the long-term value of his deal with BNSF, to depart from a long-held strategy like this.
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It looks like the deal is going to happen despite Buffet’s vocal disapproval. Time will tell if there was any validity to Buffet’s concerns.
Kraft may increase its takeover offer for Cadbury by more than the market expects, to between 840p and 850p per share, I have learned.
At that level, Cadbury’s board may recommend the bid by the US food giant.
This would bring to an end the intense animosity between the companies that has been manifested since Kraft announced its desire to own Cadbury last autumn.
It would also end any doubt at all that Cadbury will lose its independence.
There would still be a theoretical possibility that the US confectioner Hershey would come in with a higher offer.
But if Cadbury’s board recommends Kraft’s bid, it means that the company will be taken over.
Negotiations between Cadbury’s bankers and Kraft’s bankers are taking place overnight.
If a deal is agreed between Kraft and Cadbury, which seems highly likely, it will probably be announced at 7 tomorrow morning. –more
The rumor mill is at work. Kraft (NYSE:KFT) may have entered friendly talks with Cadbury (NYE:CBY) to end the ongoing battle caused by the American company’s hostile takeover offer for the UK firm.
The news, if true, would be good for Cadbury’s shareholders because the premium to close the deal should be well above the current offer and should include more cash.
Bad news for Warren Buffett, who owns a piece of Kraft, but thinks the Cadbury offer is too rich. Hershey (NYSE:HSY), which spent a lot of money on investment banking fees is left holding bag. It just got into the action too late to count. –more
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