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.
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