Baby Berkshire

What Is a Baby Berkshire?

Baby Berkshire is a nickname for Berkshire Hathaway Class B shares after the 50:1 stock split on Jan. 21, 2010. The stock split made it easier for Berkshire Hathaway to pay for its acquisition of the Burlington Northern Santa Fe railroad.

The primary difference between Berkshire Hathaway's Class A stock (BRK-A) and Class B stock (BRK-B) is the share price. As of April 22, 2022, at close, Berkshire Hathaway Class A traded for about $505,440 per share. Berkshire Hathaway Class B shares traded at approximately $335.56.

Key Takeaways

  • Baby Berkshire is a nickname for Berkshire Hathaway Class B shares after the 50:1 stock split in 2010.
  • The primary differences between Berkshire Hathaway's Class A stock (BRK-A) and Class B stock (BRK-B) are the share price and voting power.
  • The term Baby Berkshire has also been used to refer to companies with business models similar to Berkshire Hathaway's.

Understanding Baby Berkshire

When Berkshire first issued 517,500 shares of class B shares in 1996, investors initially could purchase shares for one-thirtieth of the price of a Class A share of stock. The 50-to-1 stock split in 2010 sent the ratio to 1,500-to-1. Class B shares originally came with disproportionally reduced voting rights, with 200 class B shares needed to match the voting weight of a single class A share. The class B split increased that ratio to 10,000 to 1.

Before the stock split, Berkshire class B shares did not have sufficient trading volume to make them eligible for inclusion in the S&P 500 index. The split resulted in increased trading volume as measured in shares and Berkshire class B shares were added to the S&P 500 on Feb. 12, 2010.

"Baby Berkshire" is also used to refer to businesses based on the Berkshire Hathaway business model.

Companies with Baby Berkshire Business Models

Journalists also use the term "Baby Berkshire" to describe companies with business models similar to Berkshire Hathaway's. Compass Diversified Holdings is one of these companies. Like Berkshire, Compass Diversified Holdings is essentially a publicly-traded portfolio of operating companies. "Baby Berkshire" has also been used in reference to the diversified holding company Leucadia National, now known as Jefferies Financial Group (JEF), and to Alleghany Corporation (Y), the insurance conglomerate Berkshire Hathaway agreed to acquire in 2022. Markel, a holding company for global insurance, reinsurance, and investment operations, has also been referred to as a "Baby Berkshire" by the media.

Article Sources

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  1. Berkshire Hathaway Inc. "Berkshire Hathaway Inc. Shareholders Approve 50-for-1 Split of Its Class B Common Stock."

  2. U.S. Securities and Exchange Commission. "Form 425."

  3. New York Stock Exchange. "Berkshire Hathaway Inc. BRK.A."

  4. New York Stock Exchange. "Berkshire Hathaway Inc. BRK.B."

  5. Berkshire Hathaway Inc. "News Release for Immediate Release August 14, 1996."

  6. U.S. Securities and Exchange Commission. "Definitive Proxy Statement," Pages 1-4.

  7. CNBC. "Berkshire Hathaway Goes into S&P 500 with Trading Surge at the Close."

  8. National Association of Securities Dealers Automated Quotations. "Invest Like Buffett with This 'Baby Berkshire'."

  9. National Association of Securities Dealers Automated Quotations. "Berkshire Finds Another Elephant in Alleghany."

  10. National Association of Securities Dealers Automated Quotations. "This Overlooked Insurance Stock Could Get a Boost in a Recession."

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