Billionaire investor Warren Buffett’s Berkshire Hathaway Inc., at $33,800 a share Wall Street’s most expensive stock, on Monday authorized a new, “cheaper” class of stock - which will become the second most expensive issue.
The so-called Baby Berkshires should be issued Wednesday and are expected to trade a day later on the New York Stock Exchange at about $1,000 a share, Buffett said at Berkshire’s annual meeting.
That would put it well ahead of what is now the second priciest stock, shares in The Washington Post Co., which were trading Monday at $291.50 each.
While hardly bargain-basement priced, the new class B Berkshire stock will allow more investors a chance to own a piece of a legendary conglomerate that has large investments in companies including The Washington Post, Coca-Cola Co., Gillette Co. and Wells Fargo Bank.
It also will be the first sale of new shares to the public since Buffett took control of the Omaha-based Berkshire in 1964. He has repeatedly declined to split Berkshire Hathaway shares, something that would lower the price, arguing that cheapening it would encourage speculators who don’t share Buffett’s strategy of investing for the long term.
The authorization of the new stock by shareholders allows Buffett to put the brakes on investment trusts that attempted to capitalize on his reputation by selling fractional units of Berkshire stock.
Such trusts would prey upon people with “unrealistic expectations” that Berkshires’ successes could be repeated, Buffett said.
“There are people who think it can happen again from this kind of base and it’s mathematically impossible,” Buffett said. “We don’t want to appeal subliminally to people who harbor these hopes.”
Stock in Berkshire Hathaway has quintupled so far this decade, which it began at $6,675 a share.