Key Points
-
Berkshire Hathaway said Buffett donated 12 million Class B shares, worth about $6 billion, to four family foundations.
-
Buffett said his goal is to dispose of all of his Berkshire shares within about eight years, by the end of 2034.
-
His remaining stake of roughly 188,000 Class A shares is worth about $138 billion at the current share price.
- 10 stocks we like better than Berkshire Hathaway ›
Warren Buffett gave away about $6 billion of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) stock this week: 9 million Class B shares to the Susan Thompson Buffett Foundation and 1 million each to three foundations run by his children. The bigger number is what remains — a stake worth about $138 billion that the 95-year-old chairman says he wants fully donated by Dec. 31, 2034.
The mechanics matter here. Buffett’s fortune sits in Class A shares, each convertible at any time into 1,500 Class B shares, and the conversion only works in that direction. This week’s gift of 12 million B shares took 8,000 A shares to create. Buffett owned 196,317 Class A shares as of Berkshire’s March proxy statement, so the roughly 188,000 that remain are worth about $138 billion at the current Class A price of about $733,000, as of this writing.
Gifts like this have been an annual event since 2006. Buffett has donated more than $47 billion of Berkshire stock to the Gates Foundation alone over that stretch. This year’s shares, though, went entirely to the four family foundations.
For shareholders, the scheduled supply is smaller than it sounds. Spread over eight years, $138 billion works out to something like $17 billion of stock a year finding new owners — at an insurance-anchored conglomerate valued around $1.1 trillion. And Berkshire can absorb some of it directly. The company repurchased $234 million of its own shares in the first quarter, and it entered the year with about $373 billion in cash and Treasury bills.
The bigger change is control. A Class B share carries 1/10,000th of an A share’s vote, so every conversion shrinks Buffett’s voting power, which stood at 30.2% of the company as of the proxy. As the A shares convert and disperse, the block that has anchored Berkshire’s governance for decades gradually dissolves.
The gifts don’t change what Berkshire owns or earns. They change who votes. By the mid-2030s, the company Greg Abel runs will likely be one where no single shareholder holds a controlling grip — and shareholders will have had about eight years of notice. As transitions of power go, a slow, pre-announced handover is about as gentle as it gets.
Should you buy stock in Berkshire Hathaway right now?
Before you buy stock in Berkshire Hathaway, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $400,964!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,272,955!*
Now, it’s worth noting Stock Advisor’s total average return is 930% — a market-crushing outperformance compared to 210% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Daniel Sparks and his clients have positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
