Nov 23, 2022Liked by The Rational Walk

Buffett at one time proposed a solution to this. He said people could form family corporations to hold the stock and then gift shares of that corporation to heirs, etc.

Personally I think it makes sense to do something like you propose. The price would still be high enough to dissuade the kinds of people Buffett doesn't want to attract. Economically it wouldn't change a thing.

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Thank you for your write up. It is spot on! I remember reading your previous comments (I think on Twitter) where you planned to write to Mr. Buffett about this. I am sure several long term shareholders would be willing to "co-sign". Should we request a motion to split Class A shares for next year's annual meeting that we can vote on?

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Nov 21, 2022Liked by The Rational Walk

I like your framework and seems rational. The gift tax is a tough one because the shares continue to appreciate and woud have the same issue a few years down the road when they approached the $17k annual limit. Although it would work in the interim. $10K seems like a decent level to help prevent trading shenanigans. Lastly, with Buffett converting and the BRK.A potentially being at $1 miilion a share by 2030 all the points you raise become a larger issue. Thanks for the write-up.

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One of the reasons Berkshire did so well is that its stock is not all that liquid. It doesn't have shareholders who panic sell if it misses its Q3 earnings by a penny and doesn't have frantic buyers if it beats Q2 by two cents. Class A investors are in for the very long haul, probably banking on alternative measures for lowering the tax bill like the death basis reset and trust mechanics. Since they have the voting power, management didn't have to respond to short term shareholder issues and it didn't have to worry about a leveraged buy out.

I'm going to argue against doing a Class A split. If you want fractional action, buy Class B. If you want a long term asset, and there are not all that many of these, go for Class A.

P.S. When I was a kid back in the 1960s, I was always impressed that Hoffmann LaRoche was selling for about $30K a share on the Zurich exchange. Such a high stock price seemed massively out of scale when compared to just about any other publicly traded security. I sort of assumed it was one of those Swiss things where evil bankers had to make sure they had assets on hand for zombie Nazi revenants who had kept their Swiss bank account numbers.

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