Why Doesn’t Warren Buffett Split Berkshire Hathaway Stock?
Legendary value investor and Berkshire Hathaway CEO Warren Buffett has never allowed a stock split of his company’s Class A shares, (BRK-A). reasoning that to do so would counter his basic buy-and-hold investment philosophy.
Simply put: Buffett focuses on high-quality companies with long-term growth and profit potential. And by refusing to split Berkshire Hathaway’s Class A stock shares, Buffett seeks to attract investors after his own heart—namely, those interested in long-term plays, who have extended investment horizons.
The closing price of one share of Berkshire Hathaway Class A stock (BRK.A), as of April 19, 2022.
Some Berkshire Hathaway Stock Does Split
Interestingly, Buffett has a different attitude when it comes to Berkshire Hathaway’s Class B shares (BRK.B).
Created in 1996, with the stated purpose of enabling retail investors to buy Berkshire Hathaway stock directly, Class B shares sell for a fraction of the Class A share price—around $349 per share, as of April 20, 2022.
Unlike the company’s Class A shares, Berkshire Hathaway’s Class B shares do have the potential to split. And, in fact, they did on Jan. 21, 2010, at an astonishing 50-to-1. Their price was $70.72 at the time.
While some might argue that this action contradicts Buffett’s no-split posture on his Class A shares, this duality is quite intentional, as it lets Buffett offer an affordable version of Berkshire Hathaway stock to smaller investors.
The Bottom Line
The 91-year-old Buffett has remained true to his stock-splitting principles in the 60-odd years he has helmed Berkshire Hathaway. He has not announced any intention of stepping down—though at the 2021 Berkshire Hathaway shareholder meeting, his Vice-Chairman, Charlie Munger, indicated in an off-hand remark that Buffett’s successor as CEO would be Greg Abel, currently CEO of Berkshire Hathaway Energy and Vice Chairman in charge of noninsurance operations. Abel’s philosophy regarding stock splits may well be different.