IIRC this is intentional, I seem to recall Buffet responding to this question that he intends Berkshire to be a "hold long" stock, so for that purpose it makes sense to have the retail investors pushed to class B shares (equivalent but with less voting rights, and stock splits have been done for class B shares) so that the voting shareholders are predominantly larger investors who generally have a longer term perspective than retail.

You don't need a share price of over 400k to do that.

What the hell is the point of shares without voting rights? At that point all it is sans regular dividends is a speculation vehicle, which Buffett has long been against...

What am I missing?

In theory, economic rights. If someday a dividend is paid, a stock buyback occurs, the company is liquidated, etc., all shareholders of BRK.B will be paid the same as those of BRK.A (accounting for the 1500 to 1 exchange rate).

In fact it seems like voting is actually not that important, since if you didn’t trust Buffett to run the company for you, you would be investing in something else.

In practice the rise of stuff like cryptocurrencies and NFTs shows that this theory is only partially true, and perhaps there is some nonzero lift on the price due to people just buying it because they think the company is cool or whatever.

How old is Warren Buffett? 90? Would it make sense to bet that the value of BRK.A would drop after his passing?

It will drop when that happens, but it would probably not make sense to make that bet.

If you can construct a portfolio that exposes you to only that specific event (and not something like the further increases in value until that point -- seems difficult but maybe possible?) you might learn the probability of it happening at various points in time, through its price!

Maybe you'll find that portfolio seriously underpriced (another comment gave some potential reasons why it would be) in which case there's money to be made.

> If you can construct a portfolio that exposes you to only that specific event (and not something like the further increases in value until that point -- seems difficult but maybe possible?)

You'd do that by going long in all stocks that Berkshire owns, and short Berkshire itself. The problem with that is that Berkshire also has a bunch of non-listed subsidiaries you can't buy.

I think so. And I find it hard to believe that is already priced in, because only Buffett fans are interested in buying BRK.A now, and fans are frequently not rational about their fandom.

You don’t need to buy BRK.A to benefit from Buffett’s financial acumen. You only need to buy BRK.A if you want to say you own BRK.A.

Also, the harder it is to transact a stock (and a price over $400,000 makes it hard), the less efficient price discovery is.

Even if the market has underpriced Buffett's death in BRK.A, wouldn't that be compensated by the liquidity risk you're taking on with $400,000 shares?

He recently publicly announced his successor. No issues. No one blinked. One of the best long term companies to own shares in. Investing to build wealth is a long game. All of my "bets" are looking out 20-30 years. Short term some years I have not out performed the market, but over the lifetime since I started I have (15 years so far..)

https://www.cnbc.com/2021/05/03/who-is-greg-abel-warren-buff...

There is a booked called "the millionaire next door" that is a good read.

That's probably priced in already.

Warren wouldn't characterize a long-term investment as speculating, even with no dividends and no voting rights. Speculation is when you buy something for its short-term price movements, whereas investing is buying a share of ownership in a company based on the intrinsic cash-generating ability of the company. Even with no dividends the profits don't vanish in thin air, they can get re-invested or improve price through share buy-backs

You can ride the coattails of people smarter than you?

Well you still have the economic right to part of the company during a sale.

less voting power, not none.

No voting rights. Decisions on who runs things you have no vote.

I've always felt this was a weak point for him. He goes over what he thinks makes a good investment for a normal person and why he thinks Berkshire is one of them a lot but glosses over this point any time I've heard him talk about it.

I think the idea is that he doesn't want to return cash while there are still good investments and made the B shares available for those who need liquidity.

They issued a 2nd class of share, BRK.B, which is around $280/share right now and equates to 1/1500th of an BRK.A share. Berkshire A shares are convertible to B shares, but the converse isn’t possible.

How can it not be possible? Surely if you have 1500 B shares, you can sell them and buy an A share?

Yes, but Berkshire’s stock transfer agent won’t handle the conversion from B to A. You sell them on the market and are taxed accordingly.

Their stock transfer agent will give you B shares in exchange for an A share, which is not a taxable event. It’s a mechanism to encourage arbitrageurs to keep the prices of the share classes in lockstep.

https://www.berkshirehathaway.com/brkshareholderinfo/compab....

Wouldn't going from B to A count as a wash sale?

Yes, but that only stops you from claiming capital loss, you still pay taxes on gains

Berkshire has two classes of stock A and B. B is targeted towards retail investors (trading ~$280.50 per share ATM). They don't want to split A shares because they believe that the high price attracts like minded investors focused on long term profits.

Counterpoint - why would they?

I mean this seriously, is there a benefit to the company to do this? It requires at least a little work on their part to do, why fix what isn't broke?

BRK is an unusual case where they offer both A and B, wherein B is retail-accessible. BRK.A mostly exists for bragging rights at the shareholder meetings / getting closer to a celebrity a lot of people deify.

For other businesses, stock splits can increase investment/price since it makes that stock more accessible to retail investors and more importantly their huge pile of retirement savings. For example automatic investment plans that can buy whole shares of a company each month (via salary redirected savings) are much more popular than sitting on cash for up to months to buy a single share (and that is harder to automate/brokers don't support it).

Fractional Shares should solve this issue, but many 401Ks simply don't support them, different brokers have a patchwork of what can/cannot be done with fractional shares (e.g. market orders only), and there's also questions about voting power/stock splits/broker transfers/legal rights/etc.

If fractional shares were offered not at the broker level but at the exchange level with identical [proportional] power/legal rights/access/etc to regular shares none of this would matter, but they don't at all. So we've got a system where share price is both meaningless mathematically but also somehow an impediment to an entire investment class.

Right, my point was poorly articulated. I know why most companies split, I'm just not sure what incentives BRK to do this now. Do you think their cap is negatively effected by lack of retail access? They are a weird case.

BRK.B gets you a ticket too

You can buy slices of stock now, so splitting is almost pointless.