Baby Berks Split

Wow.

It was a big deal when the Class B shares were issued in 1996 but this is unprecedented.

Am I a geek because I find this incredibly exciting?

The stock was up almost 4% when this was announced yesterday and post split, it was up 4.6%- on a day when the market as a whole dropped on the news of proposed changes to bank regulations in the U.S.

Apparently I am not the only person excited by this news.

With the 50 for 1 split, the shares will now be within striking distance of a lot more people. This alone would account for the initial surge in popularity of the stock but it will be interesting to see if this is sustained.

When the B class shares were first issued, my first thought was this would be my opportunity to buy some Buffet pixie dust. Tens of thousands I couldn’t do but a thousand and change….

It’s not that my shares are worth any more immediately post split. Instead of three $100 bills, I now have 150 loonies but if the price does take a big jump, it will be easier for me to sell some of the shares to realize the gains and still maintain a position.

Liquidity can be a good thing.

It will be easier to buy in but also to sell. Volatility anyone?

Volatility isn’t necessarily a bad thing- if you can stomach the ride. This is the kind of thing that Buffett wanted to avoid by keeping the share price high. He wants investors who will buy and hold for the long term- not the high-flying daytraders.

And if you have the guts, buy when the stock takes a dive and sell again when the pendulum swings the other way.

Of course that is an easy tactic to consider in theory but much harder to do when real money is on the line.

If you believe in the stock and it works for your portfolio, pick up some shares and hang on for the long run. Buy and hold has fallen out of fashion somewhat but this may be the opportunity to build a position in a solid company that has made few missteps since its inception.

I won’t be adding to my position right away but I will be buying- soon.

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~ by angryegg on January 22, 2010.

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