The Berkshire Hathaway stock split redistributed shares of ownership and decreased the value of each share, as noted by CNBC. This created an opportunity for more investors to purchase shares of Berkshire Hathaway stock.
Berkshire Hathaway operates in a number of unique industries, including insurance, transportation and energy, as stated by Reuters. In addition, the company serves as an investment group with a primary focus on real estate transactions. There are multiple insurance subsidiaries operating under Berkshire Hathaway, such as GEICO, General Re, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group, as listed by Forbes.
A stock split occurs when a company decides to increase its number of stock shares but maintain market capitalization, according to the SEC. If a stock becomes too expensive relative to other securities within the same industry, the company may elect a split. In the case of Berkshire Hathaway, founder Warren Buffet aimed to attract more investors, leading to a split of the Class B stock shares. Stock splits are also a means of generating additional capital, as noted by Forbes. In the case of Berkshire Hathaway, the split of Class B stock was a strategy to fund the purchase of Burlington Northern Santa Fe.