If you always wanted to invest alongside Warren Buffett, but found it too expensive, you now have your chance.
Reversing his long-time opposition to the practice of stock splitting (which has resulted in Berkshire having the highest per-share price of any NYSE stock) Warren Buffett has agreed to a 50-for-1 split ofBerkshire Class B stock, which will make it much more accessible to retail investors.
Just how does that work? For example, Berkshire Class B shares closed Monday at $3,265. After a 50-for-1 split, they would cost just $65.30.
"I know I’m more comfortable spending about $60 than $3,300," says Cliff Gallant of Keefe Bruyette & Woods on Fast Money.
That means, for just north of 60 bucks a share you could own a stake in Geico insurance, See’s candy, Benjamin Moore paint, Fruit of the Loom underwear and all the other Berkshire holdings.
Seems like a solid long-term opportunity. But what about short term? Should you buy the stock as a bet it pops on the split?
Traditionally, the answer is no. Based on fundamentals, a stock split doesn't move share price because nothing has changed.
But that might not be the case here.
"Investors may come to look at this stock as a capital markets ETF," muses Fast Money trader Joe Terranova. (That's because of all the companies Berkshire owns -- it's over 80.) And that could generate some buying.
Seems like Mr Buffett wants to bring his company to the masses -- but then again, things aren't always as they seem. In fact, Mr. Buffett didn't suggest a split because of you at all. It's intended to make it easier for shareholders of BNI who want to swap their shares for Berkshire -- as Buffett assumes control of the railroad.
And it's worth noting Class A shares of which are around $100,000, and are not being split.
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Trader disclosure: On November 3rd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman's Firm Owns (BCR): Finerman Is Long (BAC) Calls: Finerman's Firm Is Long (BAC) Call Spreads: Finerman's Firm Owns (BAC) Preferred: Finerman's Firm Owns (FLS); Finerman's Firm Is Short (FLS)Calls; Finerman's Firm Owns (MSFT); Finerman's Firm Owns(NOK); Finerman's Firm Owns (PBR); Finerman's Firm Owns (PDE); Finerman Owns (PDE); Finerman's Firm Owns (RIG); Finerman Owns (RIG); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Is Long (TGT); Finerman's Firm Is Long (WMT); Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (UNG); Finerman's Firm Is Short (USO); Seymour Owns (AA); Seymour Owns (AAPL); Seymour Owns (BAC); Seymour Owns (EEM); Seymour Owns (SBUX); Seymour Owns (F); Seymour Is Short (FXI); Seymour Owns (POT); Terranova Owns (GS); Terranova Owns (RIMM; Terranova Owns Dec. Gold Futures; Najarian Owns (HGSI) Call Spread; Najarian Owns (INTC) & Short (INTC) Calls; Najarian Owns (LAZ) & Short (LAZ) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (TEVA) & (TEVA) Call Spread; Najarian Owns (WFR) Calls; Najarian Owns (YHOO) & (YHOO) Puts
For Cliff Gallant
Gallant Owns Shares of (BRK.A)
KBW expects to Receive Compensation From (BRK.A)
For Pete Schiff
Schiff is Short the Dollar
Schiff Owns Gold
For Whitney Tilson
Funds Managed By Whitney Tilson Are Long (BRK.a) & (BRK.b)
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