Distinctive Price Points And Ownership Structures

Berkshire Hathaway: Understanding the Difference Between Class A and Class B Shares

Distinctive Price Points and Ownership Structures

Berkshire Hathaway, the renowned conglomerate helmed by Warren Buffett, offers two distinct classes of shares to investors: Class A (BRKA) and Class B (BRKB). While both classes represent ownership in the company, they differ significantly in terms of price and voting rights.

Price Disparity

The most striking difference between Class A and Class B shares lies in their price. As of July 17, 2023, Class A shares traded at an impressive $523,500 per share. In contrast, Class B shares were available at a much more modest $36.77 per share.

Voting Rights

Another key distinction between the two share classes is their voting rights. Class A shareholders enjoy one vote per share, while Class B shareholders have only one vote per 15 shares. This means that Class A shareholders have a disproportionately greater say in corporate governance matters.

Convertibility

Class A and Class B shares also differ in terms of their convertibility. Class A shareholders have the option to convert their shares into Class B shares in a 1-to-15 ratio. However, Class B shareholders do not have the same privilege.

Implications for Investors

The differences between Class A and Class B shares have several implications for investors. Those seeking exposure to Berkshire Hathaway with a lower upfront investment may prefer Class B shares. However, investors who value voting rights and prefer a more direct influence on the company's affairs may opt for Class A shares.

Conclusion

Understanding the distinctions between Berkshire Hathaway's Class A and Class B shares is crucial for investors considering investing in this iconic company. By carefully weighing the differences in price, voting rights, and convertibility, investors can make informed decisions that align with their individual investment goals and risk appetite.