“From the moment I bought [Berkshire Hathaway], I knew I wasn’t going to run it into eternity or anything. Everything I wanted to have happen has worked out.”
It does feel that leaving such a huge amount of cash accumulated for Greg Abel is a potential poisoned chalice - it really would have been better for Buffett to return a portion of it as a dividend, making it easier for Abel to do the same in the future - there's only so long that someone not called Warren Buffetr will be able to resist shareholder pressure to do something with the cash in the long-term, post-Buffett.
Yeah, I agree that the cash could add additional pressure on Abel. I did wonder there for a while if Buffett would initiate a dividend sometime in 2025 just so that it wouldn't fall onto Abel to eventually make such a big change to Berkshire policy. Because, sooner or later, it seems like dividends will inevitably happen.
I think the Rational Walk wrote a few times in recent years about how a split would also make it easier for vote-rich Class A shares to get in the hands of shareholders who strongly believe in preserving Berkshire's culture but might not be able to afford a six-figure share.
A 50:1 split for the A shares would mirror the 50:1 split for the Bs that took place in 2010 in connection with the BNSF acquisition and restore the original 30:1 ratio between the two share classes. With the As then trading around $14-15,000, they would be “giftable” under the $20K annual gift tax exemption without resorting to a conversion from A to B. I think that this could modestly stabilize the A shareholder base by limiting the need for longtime shareholders to convert from A to B, either for gifting or spending, but I’d stress that nothing is really going to counteract the major ownership change that will take place in the 10-15 years after Warren’s death since he’s mandated that his shares be liquidated and distributed to philanthropy very quickly. This ownership (and voting control) shift is really more of a problem for the 2040s rather than the 2020s, but I am prone to worrying in advance.
I completely understand why Warren and Charlie were so against splitting the stock for so long, but I think this is a pretty ingenious solution to stabilizing the shareholder base and doing as much as possible to keep votes in the hands of people who "get" Berkshire.
That was really good, Kevin. Thanks.
Thanks John! I really appreciate it!
It does feel that leaving such a huge amount of cash accumulated for Greg Abel is a potential poisoned chalice - it really would have been better for Buffett to return a portion of it as a dividend, making it easier for Abel to do the same in the future - there's only so long that someone not called Warren Buffetr will be able to resist shareholder pressure to do something with the cash in the long-term, post-Buffett.
Yeah, I agree that the cash could add additional pressure on Abel. I did wonder there for a while if Buffett would initiate a dividend sometime in 2025 just so that it wouldn't fall onto Abel to eventually make such a big change to Berkshire policy. Because, sooner or later, it seems like dividends will inevitably happen.
Personally, I'd rather see a split. This 6-figure stock price is too much and soon it will be a 7-figure price! A 10 for 1 split would satisfy me.
I think the Rational Walk wrote a few times in recent years about how a split would also make it easier for vote-rich Class A shares to get in the hands of shareholders who strongly believe in preserving Berkshire's culture but might not be able to afford a six-figure share.
A 50:1 split for the A shares would mirror the 50:1 split for the Bs that took place in 2010 in connection with the BNSF acquisition and restore the original 30:1 ratio between the two share classes. With the As then trading around $14-15,000, they would be “giftable” under the $20K annual gift tax exemption without resorting to a conversion from A to B. I think that this could modestly stabilize the A shareholder base by limiting the need for longtime shareholders to convert from A to B, either for gifting or spending, but I’d stress that nothing is really going to counteract the major ownership change that will take place in the 10-15 years after Warren’s death since he’s mandated that his shares be liquidated and distributed to philanthropy very quickly. This ownership (and voting control) shift is really more of a problem for the 2040s rather than the 2020s, but I am prone to worrying in advance.
I completely understand why Warren and Charlie were so against splitting the stock for so long, but I think this is a pretty ingenious solution to stabilizing the shareholder base and doing as much as possible to keep votes in the hands of people who "get" Berkshire.