Peddling credit cards isn't so easy that a caveman can do it.
That seems to be the conclusion Berkshire Hathaway (BRKA, Fortune 500) chief executive Warren Buffett reluctantly reached last year, when he shut down a money-losing credit card business he had dreamed up for Berkshire's Geico car-insurance unit.
The decision was disclosed in Buffett's annual letter to Berkshire shareholders, released Saturday. The letter called Geico's brief foray into credit cards "a very expensive business fiasco entirely of [Buffett's] own making."
Since Berkshire took over Geico in 1996, the company has grown rapidly, thanks to low prices and an advertising budget that has grown 25-fold to $800 million.
Geico is best known for a series of television commercials featuring a gecko that talks with a Cockney accent. Since 2004, the company also has run spots on TV showing preppy cavemen protesting the claim that buying insurance at geico.com is "so easy a caveman can do it."
Geico has been expanding fast -- it has added 4 million policyholders since 2002 and is now the top car insurer in New York, among other places -- and Buffett says he has long puzzled over which other products the company might dangle before loyal Geico customers.
Against the advice of Geico executives, Buffett said in the letter, he lit upon the idea of a Geico credit card. The Geico Platinum MasterCard was born.
"I reasoned that Geico policyholders were likely to be good credit risks and, assuming we offered an attractive card, would likely favor us with their business," Buffett wrote in this year's letter.
Buffett was so high on the idea a few years ago that he urged Berkshire shareholders to use the card.
"Sign up for the new Geico credit card," Buffett wrote in his 2005 investor letter. "It's the one I now use."
Sunday, February 28, 2010
Tuesday, February 23, 2010
Stocks hit as confidence slips
Stocks tumbled Tuesday after a key measure of consumer confidence plunged, reflecting investors' growing pessimism about the strength of the economic recovery.
The Dow Jones industrial average (INDU) lost 100 points, or 1%. The 30-share Dow had lost as much as 115 points earlier.
The S&P 500 index (SPX) lost 13 points, or 1.2%. The Nasdaq composite (COMP) fell 28 points, or 1.3%.
A mixed market turned negative after the late morning release of a weaker-than-expected reading on consumer confidence. The report reflected investor wariness this year amid some conflicting readings on the economy, debt issues at home and abroad, and lawmaker squabbling in Washington.
Stocks have been choppy lately, with the major indexes declining for four weeks, advancing for two weeks and then slipping again Monday -- despite some upbeat earnings and an $11 billion merger in the oil services sector.
The Volatility (VIX) index, Wall Street's so-called fear factor, rose 9% Tuesday as nervousness grew about the strength of the recovery.
"The bears and the bulls are in a tug of war, and today, the bears have the upper hand," said Bill Stone, chief investment strategist at PNC Financial Services Group.
He said that the consumer confidence number is one of the more forward-looking readings and is raising worries that the consumer -- already struggling in a battered labor market -- might pull back even more.
"Today it's a combo of a weak number and maybe needing to take a breather after the rally," Stone said.
Toyota problems could be electronic
Struggling after the rally: After a huge runup in 2009 based on expectations for a strong recovery in 2010, investors are now looking for proof that such a recovery will take hold.
A mixed batch of economic readings has put some doubt in the market this year, while better-than-expected fourth-quarter earnings and revenues have had little impact on investor sentiment.
China's decision to temper growth by limiting bank loans and fears of Greece's debt crisis spreading to other European nations have also played a role in the market's seesawing.
"In a broad sense, we're in the fourth quarter of a bull rally and a lot of the steam is out of it now," said Tom Hepner, financial adviser at Ruggie Wealth Management.
He said investors are looking past the fiscal and monetary stimulus that has propped up the economy over the last year and are looking at the earnings and economic reports. "We're looking at the so-called fundamentals of the market and we're not quite sure it's all there yet," he said.
Sick banks may mean feeble recovery
Federal Reserve: Last week, the Federal Reserve surprised investors by boosting the discount rate, the emergency bank lending rate, by a quarter-percentage point, to 0.75%.
It was the first change in interest rates in over a year and signaled the very early stages of the Fed returning to a more normal phase of monetary policy. However, the move was largely symbolic, as the discount rate is rarely used.
Fed Chairman Ben Bernanke testifies on Capitol Hill Wednesday and Thursday. He is expected to discuss the economy and monetary policy, but investors will be listening to see if he says anything more about the central bank's plans to close out some of the emergency programs put in place during the height of the financial crisis.
Housing: The S&P/Case-Shiller Home Price index of the 20 largest metropolitan areas fell 3.1% in December versus a year ago, in line with estimates and an improvement after a drop of 5.3% in the previous month. However, the index rose 0.3% from November's levels, suggesting the housing market is continuing to recover.
On a quarterly basis, the index fell 2.5% versus a year earlier, an improvement over the last three years.
0:00 /1:19Toyota brags about limited recall
Jobs: The Senate on Monday agreed to move forward on a $15 billion jobs creation bill that gives businesses a tax break for new hires. The bill would also extend an existing break for spending money on investments like equipment and funds highway and transit programs through the rest of the year.
Toyota: Executives from the troubled auto manufacturer are in Washington this week to discuss the company's massive recall and future plans.
At the first of three congressional hearings, witnesses argued that the problems with the brakes could be tied to the vehicles' electronic throttle system.
James Lentz, the company's U.S. sales chief was testifying Tuesday and Akio Toyoda, the company's president, was due to testify Wednesday. Toyoda is expected to tell U.S. lawmakers that the rush to expand Toyota Motor's business led to the safety issues that resulted in the recall.
Quarterly results: A number of retailers reported results Tuesday, including Dow component Home Depot (HD, Fortune 500).
Home Depot said it returned to a profit in its fiscal fourth quarter after posting a loss a year earlier, with earnings of 18 cents per share, two cents better than expected. Home Depot also boosted its dividend. But the company gave a cautious 2010 outlook amid the still-fragile economic recovery.
Target (TGT, Fortune 500) and Sears Holdings (SHLD, Fortune 500) also reported better-than-expected quarterly profit. Sears is the operator of Sears and Kmart.
Banks: Over 700 banks are at risk of failing, according to a report from the Federal Deposit Insurance Corp. published Tuesday. The FDIC said that the number of banks on its so-called problem list has climbed to 702, the highest number in 6-1/2 years.
The number has increased steadily since the start of the recession in December 2007. However, only a small percentage of banks identified as being in danger end up failing.
World Markets: In overseas trading, European markets fell and Asian markets ended mixed.
The dollar and commodities: The dollar gained versus the euro and fell against the yen.
U.S. light crude oil for April delivery fell $1.45 to settle at $78.85 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery fell $9.90 to settle at $1,103.20 per ounce.
Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.70% from 3.79% late Monday. Treasury prices and yields move in opposite directions.
Market breadth was negative. On the New York Stock Exchange, losers beat winners seven to three on volume of 1.08 billion shares. On the Nasdaq, decliners beat advancers by over two to one on volume of 2.29 billion shares.
The Dow Jones industrial average (INDU) lost 100 points, or 1%. The 30-share Dow had lost as much as 115 points earlier.
The S&P 500 index (SPX) lost 13 points, or 1.2%. The Nasdaq composite (COMP) fell 28 points, or 1.3%.
A mixed market turned negative after the late morning release of a weaker-than-expected reading on consumer confidence. The report reflected investor wariness this year amid some conflicting readings on the economy, debt issues at home and abroad, and lawmaker squabbling in Washington.
Stocks have been choppy lately, with the major indexes declining for four weeks, advancing for two weeks and then slipping again Monday -- despite some upbeat earnings and an $11 billion merger in the oil services sector.
The Volatility (VIX) index, Wall Street's so-called fear factor, rose 9% Tuesday as nervousness grew about the strength of the recovery.
"The bears and the bulls are in a tug of war, and today, the bears have the upper hand," said Bill Stone, chief investment strategist at PNC Financial Services Group.
He said that the consumer confidence number is one of the more forward-looking readings and is raising worries that the consumer -- already struggling in a battered labor market -- might pull back even more.
"Today it's a combo of a weak number and maybe needing to take a breather after the rally," Stone said.
Toyota problems could be electronic
Struggling after the rally: After a huge runup in 2009 based on expectations for a strong recovery in 2010, investors are now looking for proof that such a recovery will take hold.
A mixed batch of economic readings has put some doubt in the market this year, while better-than-expected fourth-quarter earnings and revenues have had little impact on investor sentiment.
China's decision to temper growth by limiting bank loans and fears of Greece's debt crisis spreading to other European nations have also played a role in the market's seesawing.
"In a broad sense, we're in the fourth quarter of a bull rally and a lot of the steam is out of it now," said Tom Hepner, financial adviser at Ruggie Wealth Management.
He said investors are looking past the fiscal and monetary stimulus that has propped up the economy over the last year and are looking at the earnings and economic reports. "We're looking at the so-called fundamentals of the market and we're not quite sure it's all there yet," he said.
Sick banks may mean feeble recovery
Federal Reserve: Last week, the Federal Reserve surprised investors by boosting the discount rate, the emergency bank lending rate, by a quarter-percentage point, to 0.75%.
It was the first change in interest rates in over a year and signaled the very early stages of the Fed returning to a more normal phase of monetary policy. However, the move was largely symbolic, as the discount rate is rarely used.
Fed Chairman Ben Bernanke testifies on Capitol Hill Wednesday and Thursday. He is expected to discuss the economy and monetary policy, but investors will be listening to see if he says anything more about the central bank's plans to close out some of the emergency programs put in place during the height of the financial crisis.
Housing: The S&P/Case-Shiller Home Price index of the 20 largest metropolitan areas fell 3.1% in December versus a year ago, in line with estimates and an improvement after a drop of 5.3% in the previous month. However, the index rose 0.3% from November's levels, suggesting the housing market is continuing to recover.
On a quarterly basis, the index fell 2.5% versus a year earlier, an improvement over the last three years.
0:00 /1:19Toyota brags about limited recall
Jobs: The Senate on Monday agreed to move forward on a $15 billion jobs creation bill that gives businesses a tax break for new hires. The bill would also extend an existing break for spending money on investments like equipment and funds highway and transit programs through the rest of the year.
Toyota: Executives from the troubled auto manufacturer are in Washington this week to discuss the company's massive recall and future plans.
At the first of three congressional hearings, witnesses argued that the problems with the brakes could be tied to the vehicles' electronic throttle system.
James Lentz, the company's U.S. sales chief was testifying Tuesday and Akio Toyoda, the company's president, was due to testify Wednesday. Toyoda is expected to tell U.S. lawmakers that the rush to expand Toyota Motor's business led to the safety issues that resulted in the recall.
Quarterly results: A number of retailers reported results Tuesday, including Dow component Home Depot (HD, Fortune 500).
Home Depot said it returned to a profit in its fiscal fourth quarter after posting a loss a year earlier, with earnings of 18 cents per share, two cents better than expected. Home Depot also boosted its dividend. But the company gave a cautious 2010 outlook amid the still-fragile economic recovery.
Target (TGT, Fortune 500) and Sears Holdings (SHLD, Fortune 500) also reported better-than-expected quarterly profit. Sears is the operator of Sears and Kmart.
Banks: Over 700 banks are at risk of failing, according to a report from the Federal Deposit Insurance Corp. published Tuesday. The FDIC said that the number of banks on its so-called problem list has climbed to 702, the highest number in 6-1/2 years.
The number has increased steadily since the start of the recession in December 2007. However, only a small percentage of banks identified as being in danger end up failing.
World Markets: In overseas trading, European markets fell and Asian markets ended mixed.
The dollar and commodities: The dollar gained versus the euro and fell against the yen.
U.S. light crude oil for April delivery fell $1.45 to settle at $78.85 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery fell $9.90 to settle at $1,103.20 per ounce.
Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.70% from 3.79% late Monday. Treasury prices and yields move in opposite directions.
Market breadth was negative. On the New York Stock Exchange, losers beat winners seven to three on volume of 1.08 billion shares. On the Nasdaq, decliners beat advancers by over two to one on volume of 2.29 billion shares.
Wednesday, February 17, 2010
Stocks extend gains
Stocks gained Wednesday as investors considered a better-than-expected housing report, a mixed forecast from the Federal Reserve and some upbeat company news.
The dollar firmed up, hitting dollar-traded oil, gold prices and stocks. Treasury prices plunged.
The Dow Jones industrial average (INDU) rose 40 points, or 0.4%. The S&P 500 index (SPX) added 5 points, or 0.5%. The Nasdaq composite (COMP) edged up 12 points, or 0.6%.
Stocks clung to modest gains throughout the session Wednesday as investors weighed the day's news against the headwinds that have punished stocks year-to-date.
After the close, Hewlett-Packard (HPQ, Fortune 500) reported higher quarterly earnings and revenue that topped expectations. Shares gained 1% in extended-hours trading.
Stocks rallied Tuesday after Merck (MRK, Fortune 500) and Barclays (BCS) released better-than-expected results and commodity prices rose. The Dow gained 1.7%, or 170 points, for its biggest one-day point gain since Nov. 9.
But Tuesday's advance was an exception, and stocks have had a rough start to the year, with the Dow, Nasdaq and S&P 500 posting declines for four of the last five weeks.
Worries about China limiting bank lending and the threat of Greece's debt crisis expanding have dragged on stocks. European officials have sought to soothe worries about Greece and other euro zone countries lately, but broader concerns about the strength of any recovery have continued to worry investors.
"I think the market is struggling with higher expectations going into 2010," said Alan Lancz, president at Alan B. Lancz & Associates.
Lancz said that the China and euro debt issues took investors by surprise and that while quarterly profit reports have been good, the economic news has been mixed.
"All of this has brought to light that while the economic recovery is going to be good, its not going to be as strong as had been anticipated," Lancz said. "Stock valuations are going to need to catch up to the economy.
In 2009, the Dow gained 18.8%, the S&P 500 rose 23.4% and the Nasdaq gained 44%. But the gains were even bigger off the multi-year lows of last March, with the Dow rising 59%, the S&P 500 rising 65% and the Nasdaq rising 79%.
Thursday brings the weekly jobless claims report from the Labor Department, the index of leading economic indicators (LEI) from the Conference Board, the January Producer Price Index (PPI) and the Philadelphia Fed index.
In addition, Wal-Mart Stores (WMT, Fortune 500) reports results before the start of trading. The retailer is expected to have earned $1.12 per share versus $1.03 a year earlier.
Fed minutes: The central bank released the minutes from its last policy meeting in the afternoon, as well as its revised economic forecast. Chairman Ben Bernanke and the other officials said unemployment should decline only modestly over the next few years, keeping the unemployment rate above the level that is typical during a recovery.
The bankers also gave a slight boost to forecasts for economic growth this year, lifting the target to growth of between 2.8% and 3.5% in 2010 versus November forecasts for growth between 2.5% and 3.5%.
Stimulus: One year later
Economy: Housing starts rose 2.8% in January to a 591,000 annual unit rate, according to a National Association of Home Builders report released Wednesday morning. Economists surveyed by Briefing.com thought it would rise to a 580,000 unit annual rate from a 575,000 unit annual rate in the previous month.
Building permits, a measure of builder confidence, fell 4.9% to an annual unit rate of 621,000 in January, versus forecasts for a drop to a 620,000 unit annual rate. Permits stood at a 653,000 unit annual rate in the prior month.
Industrial production rose 0.9% in January after rising 0.7% in the previous month, the government reported Wednesday. Economists surveyed by Briefing.com thought it would rise 0.7%. Capacity utilization rose to 72.6%, as expected, from 71.9% in December.
Quarterly results: Deere & Co. (DE, Fortune 500) reported higher quarterly earnings that topped estimates on lower revenue that also topped estimates. The heavy equipment maker said that cost-cutting and the benefit of better currency rates helped offset the weak economic environment. Deere also boosted its 2010 sales forecast.
Around 393 companies, or 79% of the S&P 500, have reported results. Currently, results are on track to have risen 211% from a year earlier, according to Thomson Reuters. Revenues are set to rise 8%. Stripping out the recharged financial sector, earnings are set to rise 16% and revenues 3%.
0:00 /2:38Uncertainty rings on the floor
Company news: In deal news, Walgreen (WAG, Fortune 500) said it will buy rival drugstore Duane Reade in a deal valued at $1.08 billion including debt.
Toyota (TM) said it plans to install a new brake override system in its cars, and that it will tighten controls on safety, in the aftermath of its recall of millions of autos due to faulty brakes.
However, President Akio Toyoda said he won't testify before Congress at the hearing later this month. Shares of Toyota fell nearly 3%.
When will interest rates rise?
World markets: In overseas trading, both European and Asian markets rallied.
The dollar and commodities: The dollar gained versus the euro and the yen, pressuring dollar-traded commodity prices.
U.S. light crude oil for March delivery rose 32 cents to settle at $77.33 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery rose 30 cents per ounce to settle at $1,120.10.
Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.74% from 3.66% late Tuesday. Treasury prices and yields move in opposite directions.
Market breadth was mixed. On the New York Stock Exchange, winners topped losers two to one on volume of 1.02 billion shares. On the Nasdaq, advancers beat decliners by three to two on volume of 2.06 billion shares.
The dollar firmed up, hitting dollar-traded oil, gold prices and stocks. Treasury prices plunged.
The Dow Jones industrial average (INDU) rose 40 points, or 0.4%. The S&P 500 index (SPX) added 5 points, or 0.5%. The Nasdaq composite (COMP) edged up 12 points, or 0.6%.
Stocks clung to modest gains throughout the session Wednesday as investors weighed the day's news against the headwinds that have punished stocks year-to-date.
After the close, Hewlett-Packard (HPQ, Fortune 500) reported higher quarterly earnings and revenue that topped expectations. Shares gained 1% in extended-hours trading.
Stocks rallied Tuesday after Merck (MRK, Fortune 500) and Barclays (BCS) released better-than-expected results and commodity prices rose. The Dow gained 1.7%, or 170 points, for its biggest one-day point gain since Nov. 9.
But Tuesday's advance was an exception, and stocks have had a rough start to the year, with the Dow, Nasdaq and S&P 500 posting declines for four of the last five weeks.
Worries about China limiting bank lending and the threat of Greece's debt crisis expanding have dragged on stocks. European officials have sought to soothe worries about Greece and other euro zone countries lately, but broader concerns about the strength of any recovery have continued to worry investors.
"I think the market is struggling with higher expectations going into 2010," said Alan Lancz, president at Alan B. Lancz & Associates.
Lancz said that the China and euro debt issues took investors by surprise and that while quarterly profit reports have been good, the economic news has been mixed.
"All of this has brought to light that while the economic recovery is going to be good, its not going to be as strong as had been anticipated," Lancz said. "Stock valuations are going to need to catch up to the economy.
In 2009, the Dow gained 18.8%, the S&P 500 rose 23.4% and the Nasdaq gained 44%. But the gains were even bigger off the multi-year lows of last March, with the Dow rising 59%, the S&P 500 rising 65% and the Nasdaq rising 79%.
Thursday brings the weekly jobless claims report from the Labor Department, the index of leading economic indicators (LEI) from the Conference Board, the January Producer Price Index (PPI) and the Philadelphia Fed index.
In addition, Wal-Mart Stores (WMT, Fortune 500) reports results before the start of trading. The retailer is expected to have earned $1.12 per share versus $1.03 a year earlier.
Fed minutes: The central bank released the minutes from its last policy meeting in the afternoon, as well as its revised economic forecast. Chairman Ben Bernanke and the other officials said unemployment should decline only modestly over the next few years, keeping the unemployment rate above the level that is typical during a recovery.
The bankers also gave a slight boost to forecasts for economic growth this year, lifting the target to growth of between 2.8% and 3.5% in 2010 versus November forecasts for growth between 2.5% and 3.5%.
Stimulus: One year later
Economy: Housing starts rose 2.8% in January to a 591,000 annual unit rate, according to a National Association of Home Builders report released Wednesday morning. Economists surveyed by Briefing.com thought it would rise to a 580,000 unit annual rate from a 575,000 unit annual rate in the previous month.
Building permits, a measure of builder confidence, fell 4.9% to an annual unit rate of 621,000 in January, versus forecasts for a drop to a 620,000 unit annual rate. Permits stood at a 653,000 unit annual rate in the prior month.
Industrial production rose 0.9% in January after rising 0.7% in the previous month, the government reported Wednesday. Economists surveyed by Briefing.com thought it would rise 0.7%. Capacity utilization rose to 72.6%, as expected, from 71.9% in December.
Quarterly results: Deere & Co. (DE, Fortune 500) reported higher quarterly earnings that topped estimates on lower revenue that also topped estimates. The heavy equipment maker said that cost-cutting and the benefit of better currency rates helped offset the weak economic environment. Deere also boosted its 2010 sales forecast.
Around 393 companies, or 79% of the S&P 500, have reported results. Currently, results are on track to have risen 211% from a year earlier, according to Thomson Reuters. Revenues are set to rise 8%. Stripping out the recharged financial sector, earnings are set to rise 16% and revenues 3%.
0:00 /2:38Uncertainty rings on the floor
Company news: In deal news, Walgreen (WAG, Fortune 500) said it will buy rival drugstore Duane Reade in a deal valued at $1.08 billion including debt.
Toyota (TM) said it plans to install a new brake override system in its cars, and that it will tighten controls on safety, in the aftermath of its recall of millions of autos due to faulty brakes.
However, President Akio Toyoda said he won't testify before Congress at the hearing later this month. Shares of Toyota fell nearly 3%.
When will interest rates rise?
World markets: In overseas trading, both European and Asian markets rallied.
The dollar and commodities: The dollar gained versus the euro and the yen, pressuring dollar-traded commodity prices.
U.S. light crude oil for March delivery rose 32 cents to settle at $77.33 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery rose 30 cents per ounce to settle at $1,120.10.
Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.74% from 3.66% late Tuesday. Treasury prices and yields move in opposite directions.
Market breadth was mixed. On the New York Stock Exchange, winners topped losers two to one on volume of 1.02 billion shares. On the Nasdaq, advancers beat decliners by three to two on volume of 2.06 billion shares.
Saturday, February 13, 2010
Buffett's Berkshire Hathaway joins S&P 500 Index
Warren Buffett's legendary Berkshire Hathaway joined the S&P 500 index after markets closed Friday.
Class B (BRKB) shares of Berkshire Hathaway fell during the first half of Friday's session, tracking the broader market, but began to climb in the afternoon and spiked during the last hour of trading. It ended 1.25% higher on the day, at $77.65 per share on volume of 66.4 million shares, 91% higher than the average 5.5 million.
Friday afternoon's surge in the stock's price and trading volume was a result of S&P 500 index fund managers buying the stock before close, said Fred Dickson, chief market strategist at D.A. Davidson & Co.
Companies added to the S&P 500 usually experience a boost in stock price because money managers that run index funds tied to the benchmark need to own it.
Shareholders of Berkshire Hathaway approved a 50-for-1 split of Class B common stock last month, so the company could offer shares to investors in Burlington Northern Santa Fe (BNI, Fortune 500), which it agreed to buy in November for $34 billion. Berkshire completed its purchase of the railroad company Friday.
The split cut the price of Class B shares from more than $3,300 a pop, to a more affordable $66, and paved the way for Berkshire to finally join a major stock index.
Berkshire will officially begin trading on the S&P 500 Tuesday, since the market is closed Monday in observance of President's Day.
One criteria for joining the S&P 500 Index is that the stock must be widely available. The index is a common proxy for the U.S. stock market, and major index funds that track the blue chip index hold shares of its companies.
Berkshire's Class A (BRKA, Fortune 500) stock is much pricier -- closing above $115,000 a share Friday.
Class B (BRKB) shares of Berkshire Hathaway fell during the first half of Friday's session, tracking the broader market, but began to climb in the afternoon and spiked during the last hour of trading. It ended 1.25% higher on the day, at $77.65 per share on volume of 66.4 million shares, 91% higher than the average 5.5 million.
Friday afternoon's surge in the stock's price and trading volume was a result of S&P 500 index fund managers buying the stock before close, said Fred Dickson, chief market strategist at D.A. Davidson & Co.
Companies added to the S&P 500 usually experience a boost in stock price because money managers that run index funds tied to the benchmark need to own it.
Shareholders of Berkshire Hathaway approved a 50-for-1 split of Class B common stock last month, so the company could offer shares to investors in Burlington Northern Santa Fe (BNI, Fortune 500), which it agreed to buy in November for $34 billion. Berkshire completed its purchase of the railroad company Friday.
The split cut the price of Class B shares from more than $3,300 a pop, to a more affordable $66, and paved the way for Berkshire to finally join a major stock index.
Berkshire will officially begin trading on the S&P 500 Tuesday, since the market is closed Monday in observance of President's Day.
One criteria for joining the S&P 500 Index is that the stock must be widely available. The index is a common proxy for the U.S. stock market, and major index funds that track the blue chip index hold shares of its companies.
Berkshire's Class A (BRKA, Fortune 500) stock is much pricier -- closing above $115,000 a share Friday.
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