The stock split takes effect Thursday morning. Buffett told shareholders the split will help Berkshire some day become part of the S&P 500.
"We're by far the largest company in the United States that isn't in it," he said.
Buffett said he thinks Berkshire's two classes of stock complicated matters for Standard & Poor's when that firm considered adding Berkshire to its indices. Berkshire's market capitalization of $151 billion would easily exceed S&P's requirement that a company be worth at least $3.5 billion in the eyes of the stock market. But in the past, Berkshire has been left out of the index because its shares have been cumbersome to trade.
However, after the stock split and the BNSF deal, its number of B shares will grow considerably. And Buffett said he thinks more A shares will eventually be converted into B shares.
Berkshire would benefit from joining the index because it would instantly have buyers for about 6 percent of its shares, and those mutual fund buyers that try to mirror the S&P 500 index would plan to hold the stock long-term, which is what Buffett wants.
"Over time, if it's in the S&P, I think it's a slight plus for shareholders," Buffett said.
Berkshire's Class B shares rose $144, or 4.3 percent, to close at $3,476 Wednesday. The Class A shares rose $4,170, or 4.2 percent, to finish at $104,200.
It's the some day part of the statement "Buffett told shareholders the split will help Berkshire some day become part of the S&P 500" that I am curious about.
Do you happen to know the mechanism by which stocks get listed? Do you have to apply to get listed or is it automatic if above a certain market cap and trading volume?
My understanding with the B shares is they were not listed on the S&P because the trading volume was below a threshold (what that threshold is I don't know). But if the volume is now about that threshold is listing automatic?