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Pisani: Berkshire B in the S&P Today — What to Expect

Expect a little more volume than normal Friday: Berkshire Hathaway Class B shares are going into the S&P 500 today. This is attracting an unusual amount of interest from the trading community, due to the large size of the addition. About $1 trillion is indexed to the S&P 500.

Keefe, Bruyetee & Woods estimates that 177 million shares of Berkshire will need to be bought by S&P 500 index funds at the close today. That is close to $13 billion, and about 15 times normal volume for Berkshire.

Indexers will thus need to BUY Berkshire in very large quantities, and SELL the remaining stocks in the S&P 500, in proportion to their market capitalization.

Judging by the recent volume, some traders have been accumulating Berkshire recently in hopes of selling them to indexers at the close. Indexers of course are aware of this (this is a very old game) and, depending on how their rules are constructed, may be buying ahead as well.

In general, the tendency for large additions such as this is to create a huge amount of volume but not too much in the way of price volatility.

  • Berkshire Class A Today:

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Other Companies in the News:

Toyota

Ingersoll-Rand

Bank of America

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CNBC Data Pages:

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