10 ms·

It probably would be for quite some time. The article lists the next highest stock is $5,100. This is all due to stubbornness on the part of Warren Buffet, fo

It probably would be for quite some time. The article lists the next highest stock is $5,100. This is all due to stubbornness on the part of Warren Buffet, for better or worse.

coliveira 6y ago
This should be easy for Nasdaq to solve: just force companies to split their shares before they reach certain limits. Markets can create rules that listed companies need to follow, and this seems to be a useful one.
- eru 6y ago
  Exchanges can create rules, but there's a limit to how far they can push it: If Nasdaq makes too many rules that investors or companies dislike, they'll list respectively trade elsewhere. Developments in the rest of the market make stock splitting less of an imperative than in the past. Eg Robinhood and many other retail brokerages allow you to own partial shares now. If you follow the logic of these recent developments, individual shares might become a thing of the past, and we will just directly trade fractions of whole companies. (On your computer, rational numbers are easy to implement: just represent them as a pair of arbitrary-length integers. Operations will be a lot slower than on floats or ints, but the exchange doesn't need to do too many operations per second. And market makers and hedge funds etc can use whatever approximation scheme they want in their internal systems.)
  - berkes 6y ago
    But how can you own part of a share?
    - twic 6y ago
      Same way you can own part of a horse.
    - corin_ 6y ago
      The same way you can own part of a house, part of a business, or even part of a bottle of wine. Contracts can easily dictate who owns how much of a thing, they wouldn't have to literally rip a paper stock in two.
      - colonwqbang 6y ago
        I'm not convinced. Can you go to the Berkshire shareholder meeting and vote for your 0.0001 shares? I find it much more likely that it's actually your broker who truly owns the share and you have a contract with them. This is not at all like a house which can actually have two true owners. That doesn't mean there's anything wrong with such an arrangement, of course.
        boomboomsubban 6y ago
        >Can you go to the Berkshire shareholder meeting and vote for your 0.0001 shares You could form a contract with your co-share owners describing how you allocate that benefit, just like would be necessary with a house with co-owners. I have no idea if that happens, but it's certainly just as possible.
        lostlogin 6y ago
        > Can you go to the Berkshire shareholder meeting and vote for your 0.0001 shares? I voted for part of a politician in my electorate.
        eru 6y ago
        Almost no one in the US 'truly' owns any shares. They are all held by 'Depository Trust Company' in the name of 'Cede and Company'. https://en.wikipedia.org/wiki/Depository_Trust_Company https://en.wikipedia.org/wiki/Depository_Trust_Company https://en.wikipedia.org/wiki/Cede_and_Company https://en.wikipedia.org/wiki/Cede_and_Company says > Cede technically owns substantially all of the publicly issued stock in the United States.[2] Thus, investors do not themselves hold direct property rights in stock, but rather have contractual rights that are part of a chain of contractual rights involving Cede.[3] Modifying the last link in that chain isn't such a big deal.
    - eru 6y ago
      Your broker does all the plumbing.
    - kgwgk 6y ago
      It's shares all the way down. share (noun) 1) a part or portion of a larger amount which is divided among a number of people
    - Stratoscope 6y ago
      A share is already just part of the company, a fraction of the company. Or more specifically, a fraction of the outstanding shares. Suppose you buy one share of a company that has a thousand shares outstanding. You now own one thousandth of the company, or 1/1000 of the company. Suppose instead you buy one thousandth of a share. Now you own a thousandth of a thousandth, 1/1000/1000. Or you can call it a millionth of the company, 1/1000000. It's the same number either way you write it. The point is that a share is already a fraction, and it's no great leap to have a smaller fraction than that.
      - manarth 6y ago
        Shares provide dividable benefits: fractional ownership and fractional dividend payments. They also provide indivisable benefits: the right to vote, and the right to inspect company documents. The solution to owning "a thousandth of a share" is a stock-split, where the smallest fraction is still one share.
        Stratoscope 6y ago
        Ah, thank you for the clarification, that is a nuance I completely missed. A follow-up question since you know more about this than I do: if some number of people each buy a fraction of a share, who gets to vote that share, nobody? Does it become effectively a non-voting share?
        simondotau 6y ago
        When it comes to fractional shares as a consumer-facing product, I imagine it would be effectively a non-voting share, yes. However the vote could be exercised by whatever entity actually owns the whole share. That would be entirely a decision for the people who chose to divide up the resource. Presumably BH will only accept a single binary vote per share, so it would be up to the owners of the fractional share to agree (or not).
        eru 6y ago
        You are right that fractional shares typically don't come with voting rights. But: if there was demand, Robinhood could totally offer fractional shares with voting rights. For each vote, there's typically only a finite number of possibilities. So Robinhood could just pool the voting intentions for everyone with factional shares, and then vote the whole shares accordingly. (To be really nice, Robinhood would just own a small handful of extra shares, so that they can round up those pooled votes to full integers.)
    - throwaway2037 6y ago
      I used to think the same. Recently, I was surprised to learn that many US retail brokerage firms now offer this service. If you Google (or DuckDuck) "fractional share ownership", you will find a bunch of hits with a list of brokerages and an explanation about how it works. I assume these products are "captive audience" -- you must buy or sell your fractions with the same broker. Thus, they cannot be transferred to other brokers. That said, I also assume it a very price competitive product so the margins would be thin and prices fair.
    - grey-area 6y ago
      How can you own part of a company?
      - deleted 6y ago
        [deleted]
    - Denvercoder9 6y ago
      You really don't. You own a contract that gives the same returns as the share. You don't get any voting rights.
- mulmen 6y ago
  Or they could use a larger integer.
- cturner 6y ago
  Berkshire Hathaway is NYSE listed, so Nasdaq do not set those rules for them. If a primary market created rules to mitigate systems issues, they would be harshly judged for it, and likely lose business to competitors.
  - wlll 6y ago
    I feel like the rule "you must stock split before the value of your shares reaches $429,496.7296 per share" isn't going to put too many people off :)
john_alan 6y ago
Yep, he’s really trying to force a barrier to entry. So his stock can’t be bought by small players.
- pmorici 6y ago
  He created the BRK.B share class years ago and has split that once to keep the price manageable. It stands at 1/1500 of a class A share today. The B shares do have reduced voting rights relative to the A shares on a proportional basis.
- loftyal 6y ago
  I guess you haven't heard of fractional shares
  - john_alan 6y ago
    Lol. You don’t own the share. You don’t get voting rights and the aggregator behaves as a single investor.
    - loftyal 6y ago
      Lol. Some brokers allow you to vote on fractional shares, and technically you don't own the share, but why would they care if you do or not, it's about the voting rights.
- pinky1417 6y ago
  First, as other posters have mentioned, there are b shares that trade in the hundreds of dollars - BRK.B. Yes, their voting rights are disproportionately lower, but you can still get a stake in the ownership without having $400,000 in your bank account. I own B shares. It doesn’t bother me that I have fewer voting rights because I trust my fellow Berkshire owners. So there’s little barrier to entry in merely owning a small stake in Berkshire’s economic output. Second, if you want to argue there’s a barrier to entry for voting purposes, that also doesn’t make sense: you need to have a ton of ownership in any stock to make a difference in ownership as an outside investor. It doesn’t matter if the share price is $1 million or $10 if I need $50 million in share value to make a dent in voting. Third, Buffett has stated that he doesn’t want to split shares because he wants to encourage long-term owners. There’s a lack of liquidity in A shares; I’ve heard usually only about 1,200 trade a day. He, and I’m sure many other Berkshire shareholders, want their fellow shareholders to think like long-term owners of a private business, especially for shareholders with a lot of voting influence. A high share price and its corresponding low liquidity encourages that.
Aeolun 6y ago
I don’t think Buffet should be forced to do anything simply because the exchange cannot keep up with the increase in price. It’s not like they haven’t seen this coming for literal years. Maybe they were assuming he’d give in?
- katbyte 6y ago
  at this point he may be holding out to hit that limit
  - toyg 6y ago
    Good Guy Buffett, testing the exchange for them.
- nroets 6y ago
  It's not just the exchange that struggles: 1. Many retail investors do not have the funds to buy a full share. 2. Anyone who makes a spreadsheet containing the share prices of largest companies has to make that column wide enough to accommodate 6 digit numbers.
  - sunpar 6y ago
    He created BRKB for just this purpose. He doesn't need to split BRKA for any reason other than Nasdaq's computers
    - nroets 6y ago
      Creating a second class of share is a very very bad solution: It splits exchange liquidity. It also complicates all the investor relations correspondence, adding lawyer fees.
      - dsomers 6y ago
        I think they’re doing fine regardless.
valuearb 6y ago
There are numerous OTC stocks trading for over $5,000, I know of at least two over $20,000.
- xref 6y ago
  What nyse/nasdaq stocks are over $5k? I see Lindt & Spruengli AG but it’s listed in Switzerland in CHF Swiss francs
  - throwaway2037 6y ago
    To be clear, the original poster specific OTC (over-the-counter), which means does not trade on a regular stock exchange, like NYSE & NASDAQ. Also, to give credit to your answer, >5K CHF is more than 5K USD! Looks like CHF->USD is about 1.09 right now.
    - deleted 6y ago
      [deleted]
    - captainpiggies 6y ago
      To be precise Lindt & Sprüngli (LISN) is currently trading for CHF 90’900 roughly USD 99’485. And as a fun fact they have quite a famous natural dividend a suitcase full of chocolate :)
  - valuearb 6y ago
    I found a couple by going through the OTC daily lists and looking at dividend payers. I’d double take seeing somecompany paying a $500 or $1,000 dividend, look it up and they would have some crazy stock price. But note: they’d also only trade once a month or so.
- throwaway2037 6y ago
  Nice comment. Do you have a website with a list? Or can you share a few names? Others might be interested on specific names.
LorenPechtel 6y ago
Stubbornness? More like a deliberate plan to concentrate voting control. You can perfectly well buy Berkshire Hathaway without plonking down a half million dollars--there are class B shares. It's just class B shares don't have anything like the voting power that class A shares have. Class A shares can be divided up into class B shares but you can't combine class B shares to make a class A share. The result is the owners of the class A shares have voting power far beyond their percentage of the company. Warren Buffet has no need for a market in class A shares to even exist. The common man should buy class B.

It probably would be for quite some time. The article lists the next highest stock is $5,100. This is all due to stubbornness on the part of Warren Buffet, for better or worse.

coliveira 6y ago

This should be easy for Nasdaq to solve: just force companies to split their shares before they reach certain limits. Markets can create rules that listed companies need to follow, and this seems to be a useful one.

eru 6y ago
Exchanges can create rules, but there's a limit to how far they can push it: If Nasdaq makes too many rules that investors or companies dislike, they'll list respectively trade elsewhere. Developments in the rest of the market make stock splitting less of an imperative than in the past. Eg Robinhood and many other retail brokerages allow you to own partial shares now. If you follow the logic of these recent developments, individual shares might become a thing of the past, and we will just directly trade fractions of whole companies. (On your computer, rational numbers are easy to implement: just represent them as a pair of arbitrary-length integers. Operations will be a lot slower than on floats or ints, but the exchange doesn't need to do too many operations per second. And market makers and hedge funds etc can use whatever approximation scheme they want in their internal systems.)
- berkes 6y ago
  But how can you own part of a share?
  - twic 6y ago
    Same way you can own part of a horse.
  - corin_ 6y ago
    The same way you can own part of a house, part of a business, or even part of a bottle of wine. Contracts can easily dictate who owns how much of a thing, they wouldn't have to literally rip a paper stock in two.
    - colonwqbang 6y ago
      I'm not convinced. Can you go to the Berkshire shareholder meeting and vote for your 0.0001 shares? I find it much more likely that it's actually your broker who truly owns the share and you have a contract with them. This is not at all like a house which can actually have two true owners. That doesn't mean there's anything wrong with such an arrangement, of course.
      - boomboomsubban 6y ago
        >Can you go to the Berkshire shareholder meeting and vote for your 0.0001 shares You could form a contract with your co-share owners describing how you allocate that benefit, just like would be necessary with a house with co-owners. I have no idea if that happens, but it's certainly just as possible.
      - lostlogin 6y ago
        > Can you go to the Berkshire shareholder meeting and vote for your 0.0001 shares? I voted for part of a politician in my electorate.
      - eru 6y ago
        Almost no one in the US 'truly' owns any shares. They are all held by 'Depository Trust Company' in the name of 'Cede and Company'. https://en.wikipedia.org/wiki/Depository_Trust_Company https://en.wikipedia.org/wiki/Depository_Trust_Company https://en.wikipedia.org/wiki/Cede_and_Company https://en.wikipedia.org/wiki/Cede_and_Company says > Cede technically owns substantially all of the publicly issued stock in the United States.[2] Thus, investors do not themselves hold direct property rights in stock, but rather have contractual rights that are part of a chain of contractual rights involving Cede.[3] Modifying the last link in that chain isn't such a big deal.
  - eru 6y ago
    Your broker does all the plumbing.
  - kgwgk 6y ago
    It's shares all the way down. share (noun) 1) a part or portion of a larger amount which is divided among a number of people
  - Stratoscope 6y ago
    A share is already just part of the company, a fraction of the company. Or more specifically, a fraction of the outstanding shares. Suppose you buy one share of a company that has a thousand shares outstanding. You now own one thousandth of the company, or 1/1000 of the company. Suppose instead you buy one thousandth of a share. Now you own a thousandth of a thousandth, 1/1000/1000. Or you can call it a millionth of the company, 1/1000000. It's the same number either way you write it. The point is that a share is already a fraction, and it's no great leap to have a smaller fraction than that.
    - manarth 6y ago
      Shares provide dividable benefits: fractional ownership and fractional dividend payments. They also provide indivisable benefits: the right to vote, and the right to inspect company documents. The solution to owning "a thousandth of a share" is a stock-split, where the smallest fraction is still one share.
      - Stratoscope 6y ago
        Ah, thank you for the clarification, that is a nuance I completely missed. A follow-up question since you know more about this than I do: if some number of people each buy a fraction of a share, who gets to vote that share, nobody? Does it become effectively a non-voting share?
        simondotau 6y ago
        When it comes to fractional shares as a consumer-facing product, I imagine it would be effectively a non-voting share, yes. However the vote could be exercised by whatever entity actually owns the whole share. That would be entirely a decision for the people who chose to divide up the resource. Presumably BH will only accept a single binary vote per share, so it would be up to the owners of the fractional share to agree (or not).
        eru 6y ago
        You are right that fractional shares typically don't come with voting rights. But: if there was demand, Robinhood could totally offer fractional shares with voting rights. For each vote, there's typically only a finite number of possibilities. So Robinhood could just pool the voting intentions for everyone with factional shares, and then vote the whole shares accordingly. (To be really nice, Robinhood would just own a small handful of extra shares, so that they can round up those pooled votes to full integers.)
  - throwaway2037 6y ago
    I used to think the same. Recently, I was surprised to learn that many US retail brokerage firms now offer this service. If you Google (or DuckDuck) "fractional share ownership", you will find a bunch of hits with a list of brokerages and an explanation about how it works. I assume these products are "captive audience" -- you must buy or sell your fractions with the same broker. Thus, they cannot be transferred to other brokers. That said, I also assume it a very price competitive product so the margins would be thin and prices fair.
  - grey-area 6y ago
    How can you own part of a company?
    - deleted 6y ago
      [deleted]
  - Denvercoder9 6y ago
    You really don't. You own a contract that gives the same returns as the share. You don't get any voting rights.
mulmen 6y ago
Or they could use a larger integer.
cturner 6y ago
Berkshire Hathaway is NYSE listed, so Nasdaq do not set those rules for them. If a primary market created rules to mitigate systems issues, they would be harshly judged for it, and likely lose business to competitors.
- wlll 6y ago
  I feel like the rule "you must stock split before the value of your shares reaches $429,496.7296 per share" isn't going to put too many people off :)

john_alan 6y ago

Yep, he’s really trying to force a barrier to entry. So his stock can’t be bought by small players.

pmorici 6y ago
He created the BRK.B share class years ago and has split that once to keep the price manageable. It stands at 1/1500 of a class A share today. The B shares do have reduced voting rights relative to the A shares on a proportional basis.
loftyal 6y ago
I guess you haven't heard of fractional shares
- john_alan 6y ago
  Lol. You don’t own the share. You don’t get voting rights and the aggregator behaves as a single investor.
  - loftyal 6y ago
    Lol. Some brokers allow you to vote on fractional shares, and technically you don't own the share, but why would they care if you do or not, it's about the voting rights.
pinky1417 6y ago
First, as other posters have mentioned, there are b shares that trade in the hundreds of dollars - BRK.B. Yes, their voting rights are disproportionately lower, but you can still get a stake in the ownership without having $400,000 in your bank account. I own B shares. It doesn’t bother me that I have fewer voting rights because I trust my fellow Berkshire owners. So there’s little barrier to entry in merely owning a small stake in Berkshire’s economic output. Second, if you want to argue there’s a barrier to entry for voting purposes, that also doesn’t make sense: you need to have a ton of ownership in any stock to make a difference in ownership as an outside investor. It doesn’t matter if the share price is $1 million or $10 if I need $50 million in share value to make a dent in voting. Third, Buffett has stated that he doesn’t want to split shares because he wants to encourage long-term owners. There’s a lack of liquidity in A shares; I’ve heard usually only about 1,200 trade a day. He, and I’m sure many other Berkshire shareholders, want their fellow shareholders to think like long-term owners of a private business, especially for shareholders with a lot of voting influence. A high share price and its corresponding low liquidity encourages that.

Aeolun 6y ago

I don’t think Buffet should be forced to do anything simply because the exchange cannot keep up with the increase in price. It’s not like they haven’t seen this coming for literal years. Maybe they were assuming he’d give in?

katbyte 6y ago
at this point he may be holding out to hit that limit
- toyg 6y ago
  Good Guy Buffett, testing the exchange for them.
nroets 6y ago
It's not just the exchange that struggles: 1. Many retail investors do not have the funds to buy a full share. 2. Anyone who makes a spreadsheet containing the share prices of largest companies has to make that column wide enough to accommodate 6 digit numbers.
- sunpar 6y ago
  He created BRKB for just this purpose. He doesn't need to split BRKA for any reason other than Nasdaq's computers
  - nroets 6y ago
    Creating a second class of share is a very very bad solution: It splits exchange liquidity. It also complicates all the investor relations correspondence, adding lawyer fees.
    - dsomers 6y ago
      I think they’re doing fine regardless.

valuearb 6y ago

There are numerous OTC stocks trading for over $5,000, I know of at least two over $20,000.

xref 6y ago
What nyse/nasdaq stocks are over $5k? I see Lindt & Spruengli AG but it’s listed in Switzerland in CHF Swiss francs
- throwaway2037 6y ago
  To be clear, the original poster specific OTC (over-the-counter), which means does not trade on a regular stock exchange, like NYSE & NASDAQ. Also, to give credit to your answer, >5K CHF is more than 5K USD! Looks like CHF->USD is about 1.09 right now.
  - deleted 6y ago
    [deleted]
  - captainpiggies 6y ago
    To be precise Lindt & Sprüngli (LISN) is currently trading for CHF 90’900 roughly USD 99’485. And as a fun fact they have quite a famous natural dividend a suitcase full of chocolate :)
- valuearb 6y ago
  I found a couple by going through the OTC daily lists and looking at dividend payers. I’d double take seeing somecompany paying a $500 or $1,000 dividend, look it up and they would have some crazy stock price. But note: they’d also only trade once a month or so.
throwaway2037 6y ago
Nice comment. Do you have a website with a list? Or can you share a few names? Others might be interested on specific names.

LorenPechtel 6y ago

Stubbornness? More like a deliberate plan to concentrate voting control. You can perfectly well buy Berkshire Hathaway without plonking down a half million dollars--there are class B shares. It's just class B shares don't have anything like the voting power that class A shares have. Class A shares can be divided up into class B shares but you can't combine class B shares to make a class A share. The result is the owners of the class A shares have voting power far beyond their percentage of the company. Warren Buffet has no need for a market in class A shares to even exist. The common man should buy class B.