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Berkshire May Join S&P 500

Burlington Northern acquisition puts Buffett in index's sights

By Kevin Spak,  Newser Staff

Posted Nov 6, 2009 10:34 AM CST

(Newser) – Could Warren Buffett finally be headed to the S&P 500? For years, Berkshire Hathaway’s stock—both the A shares and the so-called “Baby Berkshire” B shares—have been too expensive for the index, at $101,000 and $3,380 each, respectively. But now that Berkshire has acquired S&P component Burlington Northern, it could be on the fast track for a spot, Barron’s reports.

To do it, Berkshire’s B shares would have to do a 50-for-1 split. Management has proposed such a move, but shareholders still must approve it. The stock would also need to trade at a higher volume, but that shouldn’t be a problem after the split. If Berkshire is added, the index would buy $4 billion worth, which usually boosts the price considerably. So Barron’s suggests grabbing options on it now.

Burlington Northern Santa Fe locomotives are seen in a rail yard in Kansas City, Kan. Tuesday, Nov. 3, 2009.
Burlington Northern Santa Fe locomotives are seen in a rail yard in Kansas City, Kan. Tuesday, Nov. 3, 2009.   (AP Photo/Charlie Riedel)
Berkshire Hathaway CEO Warren Buffett plays bridge with shareholders at the annual Berkshire Hathaway shareholders meeting in Omaha, Neb., Sunday, May 3, 2009.
Berkshire Hathaway CEO Warren Buffett plays bridge with shareholders at the annual Berkshire Hathaway shareholders meeting in Omaha, Neb., Sunday, May 3, 2009.   (AP Photo/Nati Harnik)
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COMMENTS
Showing 2 of 2 comments
yellowjeep
Nov 7, 2009 1:16 AM CST
Not bad at all this is pretty interesting news.
hybrid
Nov 6, 2009 4:39 AM CST
not bad advise

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