Difference Between Berkshire Hathaway Class A and Class B Stocks
Eugene Guo | April 13th 2020 | Editor: Nichola Monroe
History and Origins:
Issued in 1996, Class B stocks initially went for one-30th the price of Class A Stocks at Berkshire Hathaway. As the company’s A shares have been historically high, the move was to allow retail investors to invest in the company without relying on unit investment to take an indirect ownership of the company’s stake. Today, after a 50-1 stock split in 2010, Class B stocks only represent one-1500th of the value of a A Class stock. As of April of 2020, a Class A stock is valued at $290,500.00 per share and a Class B at $194.00 per share. Though these two stocks both represent a stake in the same company, the different pools of investors in the two classes and different price points give the stocks their own Pros and Cons for investment.
Pros of Class A (BRK.A):
Class A stocks are usually acquired for a Long term investment in the company, Buffet’s idea is to use the high price of the Class A stocks to attract like-minded long term investors. Though there is no promise for future performance, Class A stocks have historically outperformed Class B stocks because of this difference. In addition, unlike Class B stocks, Class A stocks are not likely to have stock splits in the future, making it a safe long term investment for investors.
Pros of Class B (BRK.B):
Class B stocks are designed for retail investors with a smaller capital to work with. The Benefits of these stocks are their Flexibility and Tax benefits. As Class B stocks are at a much lower price, an investor in need of cash would not have to sell an entire Class A stock worth around 290,000 dollars a time but could take their money out of the market a little bit at a time, cashing out as many as they need using Class B. Also, with the much lower price, Class B stocks get a lot of tax benefits which Class A doesn’t. For example, different from Class A, you would not need to give a gift tax as you pass on your equity.