Buffett Watch

Berkshire Hathaway Shares Close 5% Higher On S&P Addition

Shares of Warren Buffett's Berkshire Hathaway ended almost 5 percent higher after their first full trading day on news the stock is going into the S&P 500 index.

Berkshire's Class B shares closed today at $71.25, a gain of 4.94 percent from yesterday's (January 26) 4p ET close of $68.

But that's still below the 14-month closing high of $72.72 last Thursday (January 21), the first day of trading after the 50-for-1 stock split approved by shareholders the day before was put into effect.

As many had predicted, the split paved the way for last night's announcement that Berkshire will be added to the S&P 500 on a future date to be announced.  (I assume it will be right around the time Berkshire closes its deal to buy Burlington Northern Santa Fe, the stock it is replacing in the index.  That's expected next month, if BNSF shareholders vote to approve the acquisition.)

In his live interview (full transcript) with CNBC's Becky Quick last week just before a special shareholders meeting, Buffett said a positive BNSF result isn't a slam-dunk certainty, in contrast to the then upcoming vote by Berkshire shareholders to approve the Class B split:

BUFFETT: Their vote is tougher because they need -- because we own the shares we do already -- they need 66-2/3% of all shares not owned by Berkshire, not just the ones at the meeting. So they have a pretty high hurdle right now. But the (BNSF) vote is coming in well, but this vote (by Berkshire shareholders on the split) is a lot easier.