Berkshire Hathaway has two share classes. Which is right for you?
Berkshire Hathaway (BRK.A 0.58%) (BRK.B 0.38%) stock has proven to be one of the best-performing investments of all time. Since 1980, shares have increased more than 2,000 times in value. A $500 investment would now be worth a cool $1 million.
Want to invest in Berkshire? There are two options: A shares or B shares. The ticker symbol for the A shares is BRK.A, while the ticker symbol for the B shares is BRK.B. Which Berkshire stock should you buy?
Most people should buy this Berkshire stock
Warren Buffett decided to create a second class of Berkshire stock in 1996. At the time, the price of Berkshire's original shares had exceeded $30,000. That's a lot more than most people were prepared to spend on a single share of stock.
To make Berkshire more accessible, several independent funds were preparing vehicles that would allow investors to gain exposure to Berkshire without needing to pony up $30,000. In his 1996 shareholder letter, Buffett stressed that these funds "would have marketed themselves as Berkshire look-alikes." He worried they would use Berkshire's reputation to "entice naive small investors and would have charged these innocents high fees and commissions."
In response, Berkshire B shares were created, with a starting price of just over $1,000. A-share owners had the right to convert to B shares on a 30-for-1 basis. However, B shares carried slightly weaker voting rights, with each share having 1/200th of the voting rights of an A share. But B shares still conveyed ownership in Berkshire, and at a lower price. Now, smaller investors could buy into Berkshire without needing to invest in a separately managed fund that charged unnecessary fees.
Note that the A shares have never experienced a stock split, and now have a price above $600,000. The B shares, meanwhile, have been split to help fund acquisitions, and now have a price of around $400. Many long-term investors enjoy the novelty and commitment required to own Berkshire's A shares, but for the vast majority of investors, the B shares provide the same exposure in a more affordable, far more flexible way.
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
FAQs
Key Points
Should I invest in Berkshire Hathaway A or B? ›
Instead of around an average of 7,800 shares sold each day for A shares, around 3 million shares are traded on an average day. Combined with the more affordable price and higher trade volume, you have a better shot of buying the Berkshire Hathaway B share.
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Why does BRK B not pay dividends? ›
Since Buffett took over the company, shares have risen in value by an average of nearly 20% per year, roughly double the rate of the S&P 500. This is the main reason Buffett hasn't authorized another dividend: He believes investors are simply better off having him and his team invest the capital.
Does BRK B outperform S&P? ›
Historical Performance
Berkshire Hathaway: Has historically outperformed the S&P 500 over the long term under Warren Buffett's leadership. However, past performance doesn't guarantee future results.
What will brk b be worth in 10 years? ›
Berkshire Hathaway stock price stood at $407.46
According to the latest long-term forecast, Berkshire Hathaway price will hit $450 by the end of 2024 and then $500 by the end of 2026. Berkshire Hathaway will rise to $600 within the year of 2028, $700 in 2029, $800 in 2031 and $900 in 2033.
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The Motley Fool has positions in and recommends Qualcomm. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services.
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Warren Buffett's stock purchases in the most recent quarter include Chubb Limited (CB) and Occidental Petroleum (OXY). HP Inc. (HPQ) and Paramount Global (PARA) are among Warren Buffett's stock sales in the most recent quarter. The Berkshire Hathaway portfolio includes 41 stocks as of May 2024, including Apple Inc.
Let's say that you start with the time frame in mind, hoping an investment will double in value over the next 10 years. Applying the Rule of 72, you simply divide 72 by 10. This says the investment will need to go up 7.2% annually to double in 10 years. You could also start with your expected rate of return in mind.
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Should you buy BRK A or BRK B? ›
Class A shares will typically grant more voting rights than other classes. This difference is often only pertinent for shareholders who take an active role in the company. Nevertheless, because of the voting rights, A-shares are often more valuable than B shares.
What is the best dividend paying stock for Warren Buffett? ›
Best of the bunch
- Citigroup. Citigroup (NYSE: C) is one the cheapest stocks Buffett owns based on its forward earnings multiple of under 10.5. ...
- The Coca-Cola Company. Buffett loves The Coca-Cola Company (NYSE: KO) and its soft drinks. ...
- Marubeni. ...
- Sumitomo. ...
- Chevron.
Presently, with Berkshire's Class B stock trading at $357 per share, the level of affordability seems reasonably manageable, meaning investors should not anticipate a stock split from Berkshire in the near future.
Are Class B shares worth anything? ›
Class B mutual fund shares are seen to be a good investment if investors have less cash and a longer time horizon. To avoid the exit fee, an investor should typically remain in the fund for five to eight years.
Is brkb a good stock to buy? ›
Berkshire Hathaway
A 0.58%) (BRK. B 0.38%) stock has proven to be one of the best-performing investments of all time. Since 1980, shares have increased more than 2,000 times in value. A $500 investment would now be worth a cool $1 million.
Will Berkshire Hathaway B stock go up? ›
Based on analyst ratings, Berkshire Hathaway B's 12-month average price target is $447.50. Berkshire Hathaway B has 7.33% upside potential, based on the analysts' average price target.
Will brk b split again? ›
Presently, with Berkshire's Class B stock trading at $357 per share, the level of affordability seems reasonably manageable, meaning investors should not anticipate a stock split from Berkshire in the near future.
