Berkshire Hathaway soars
B shares are seeing high volume today after news that the company will join the S&P 500.
Traders are heavy on the shares after the announcement that Berkshire will become a member of the S&P 100 and S&P 500 indexes, replacing Burlington Northern Santa Fe (BNI).
Warren Buffett's Berkshire is buying the railroad for $100 a share in cash and stock. It split its class B shares 50-to-1 to make it easier to issue stock to Burlington Northern shareholders, according to Dow Jones.
Now Berkshire is one of the 10 largest U.S. companies, with a market cap of nearly $170 billion, reports the Bespoke Investment Group.
Expect Berkshire's entry to cause some short-term havoc, Bespoke reports. That's because it will likely weight about 1.1% in the S&P 500 when it is added. That means index managers will have to make room for Berkshire by selling about 1.1% of their holdings in the index's remaining 498 stocks.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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