x Abu Dhabi, UAEWednesday 26 July 2017

Baby Berkshire shares attract the minnows

What's down Buffett. Split is a headache for Buffett but good news for investors.

OMAHA // Shares in Warren Buffett's famed investment empire are now more affordable. Thanks to a stock split approved on Wednesday, many small investors plan to snap up Berkshire Hathaway shares that will sell for just over US$69 (Dh253). That's down from about $3,500 that each Class B share commanded before. Individual Berkshire shares have not been priced this low since the early 1970s.

"It now makes it available to a child who cuts grass for spending money," said Andy Kilpatrick, a stockbroker and author of a two-volume book on Mr Buffett's life and business. Known as the "Oracle of Omaha", Mr Buffett built his reputation as a savvy investor who spots quality businesses selling cheaply and either buys the stock or the whole company. Omaha-based Berkshire has investments in such companies as Coca-Cola and Wells Fargo, and owns more than 60 subsidiaries including clothing, furniture and jewellery companies.

All Berkshire shareholders are eligible to attend the company's annual meeting, in which Mr Buffett doles out his homespun investing wisdom. The event routinely draws more than 30,000 fans to Omaha for the three-day affair, which has an almost carnival-like atmosphere, including a shareholder reception on the eve of the meeting, various parties and a six-hour question and answer session with Mr Buffett.

The company's prized Class A shares, which carry more voting rights and are not being split, are the most expensive stock in the US at about $100,000 each. The Class B shares, dubbed "Baby Berkshires", are splitting 50-for-1 as a way to facilitate the company's plan to buy the railroad giant Burlington Northern Santa Fe Railway. Mr Buffett, long opposed to stock splits, said he enjoyed using stock for the railroad deal "about as much as preparing for a colonoscopy".

Opinion is split on the effect the move will have on the stock's direction. Plenty believe it will help the Class B price rise, especially if Berkshire's increased liquidity lands the stock in the Standard & Poor 500 index. Mr Buffett, who rarely comments on Berkshire's stock price, said this week that he believed the company was undervalued. * Associated Press