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
Burlington Northern Santa Fe locomotives are seen in a rail yard in Kansas City, Kan. Tuesday, Nov. 3, 2009.   (AP Photo/Charlie Riedel)
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(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.