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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
by PeterisP 6y ago
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.
- salawat 6y agoWhat 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?
- jws 6y agoYou can ride the coattails of people smarter than you?
- xboxnolifes 6y agoless voting power, not none.
- ipaddr 6y agoNo voting rights. Decisions on who runs things you have no vote.
- jrumbut 6y agoI'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.
- sinsterizme 6y agoWarren 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
- smabie 6y agoWell you still have the economic right to part of the company during a sale.
- umanwizard 6y agoIn 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.
- VintageCool 6y agoHow old is Warren Buffett? 90? Would it make sense to bet that the value of BRK.A would drop after his passing?
- TameAntelope 6y agoThat's probably priced in already.
- snowwrestler 6y agoI 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.
- kqr 6y agoEven 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?
- kqr 6y agoIt 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.
- Mauricebranagh 6y agoYou don't need a share price of over 400k to do that.