Berkshire Hathaway Inc.
It is trading at over $ 421,000 per Class A share and the market is optimistic. That’s the problem
The price went up very high, almost reaching the maximum amount that could be stored in the same way as a conventional exchange computer that managed numbers.
On Tuesday in the Nasdaq Inc.
Temporarily suspended broadcasting prices for Berkshire’s Class A stocks in several popular feeds. The feed provides real-time price updates for many online brokers and financial websites.
Nasdaq computers can be counted very high because of the compact digital format used to communicate price. The biggest figure they can handle is $ 429,496.7295.The Nasdaq is rushing to complete the upgrade later this month to fix the problem.
It̵7;s not just Nasdaq, another exchange operator, IEX Group Inc., said in March it would stop accepting investor orders for Berkshire Hathaway’s Class A shares “due to price restrictions within the trading system.”
It’s a Y2K version of the stock market bug. And it becomes more pressing as Warren Buffett’s shares are up more than 20 percent this year, driven by rising markets and a return to profit after the outbreak. COVID-19 in 2020
Here’s the problem: Nasdaq and other market operators record stock prices in a compact computer running 32-bit or one and a half. The largest possible number is two to the 32 minus one, or 4,294,967,295. Stock prices are usually stored using four decimal places, so the highest possible price is $ 429,496.7295.
No other stock is close to the Berkshire Class A stratosphere price level, so it is understandable why the engineers behind Nasdaq and IEX systems chose a number format, which programmers call a four-byte integer that Unsigned
The second-highest U.S. stock, homebuilder NVR Inc., is trading above $ 5,100 per share. Using a compact format that consumes less memory can make the software more powerful, a top priority in the world of electronic stock trading.
The root of the problem is that Buffett has refused to continue a decades-old split of Berkshire’s Class A shares. Stay until the Berkshires part, ”according to Fortune magazine. Pressing the issue, he told shareholders that a lower price would allow uncomplicated short-term investors to enter the stock.
“I know that if we have something, it’s a lot easier for anyone with $ 500 to buy it, we will have a lot of people who buy it who don’t have the clearest idea of what they’re doing.” He told investors that Berkshire Annual Meeting 1995
Since then, Berkshire has launched Class B stocks at lower prices to expand the company’s investor base, and now many brokers offer fraction trading, giving investors a few dollars in reserve to buy a small piece of Berkshire.
Still, Mr Buffett insisted on not breaking up Berkshire Class A shares.
Berkshire did not respond to requests for comment.
In a client alert Monday, Nasdaq said it would finish upgrading its data feed on May 17 to keep its share price above $ 429,496.7295.However, the stock exchange previously said it would suspend the release of any excess stock price. 98% of the provisional threshold
It came on Tuesday when Berkshire Class A shares closed at $ 421,420.00, a Nasdaq spokeswoman confirmed that the stock had effectively disappeared from the affected feed that included the Nasdaq Last Sale and Nasdaq Basic.
Brokers use those feeds, such as Robinhood and Webull Financial LLC, according to the broker’s website, as well as some online financial news and information providers. It could be that it could cause a hiccup for investors following the Berkshire Class A price if the broker had no backup sources.A Robinhood spokesperson said the broker was not affected.Webull declined to comment.
“Data integrity is of the utmost importance on the Nasdaq,” said a spokeswoman for the New York exchange, calling for a temporary move. A spokesman for the New York Stock Exchange, where Berkshire is listed and manages most of the trading of its Class A shares, said the NYSE’s system would not be impacted by the issue.
A decade ago, it was unusual for any stock to trade above $ 100 per share, but since then, many executives have followed Mr Buffett’s leadership in refusing to split the stock and the club’s current. Of companies with stock prices above $ 1,000, including letter Inc.,
And Chipotle Mexican Grill Inc.
That sparked some shock among stock market observers who said the market performed better when stock prices weren’t so high.
James Angel, a finance professor at Georgetown University who studies the issue, said the rising share price resulted in higher trading costs for investors. Now, Berkshire’s oversized stock price has forced an overhaul of the time-consuming stock market system, he added.
“This is just one of the problems Berkshire has inflicted upon so many others as they refuse to split their shares,” said Mr Angel.
However, the professor also emphasized his respect for Berkshire’s long-standing chief executive. “I’m a huge Warren Buffett fan,” Mr. Angel said. Twice a day But this is one area that I disagree with. “
Write to Alexander Osipovich at firstname.lastname@example.org.
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