"32-bit number representing the number of 1/100'ths of a penny ought to be enough for anybody."
If Nasdaq makes too many rules that investors or companies dislike, they'll list respectively trade elsewhere.
Developments in the rest of the market make stock splitting less of an imperative than in the past. Eg Robinhood and many other retail brokerages allow you to own partial shares now.
If you follow the logic of these recent developments, individual shares might become a thing of the past, and we will just directly trade fractions of whole companies.
(On your computer, rational numbers are easy to implement: just represent them as a pair of arbitrary-length integers.
Operations will be a lot slower than on floats or ints, but the exchange doesn't need to do too many operations per second. And market makers and hedge funds etc can use whatever approximation scheme they want in their internal systems.)
I find it much more likely that it's actually your broker who truly owns the share and you have a contract with them. This is not at all like a house which can actually have two true owners.
That doesn't mean there's anything wrong with such an arrangement, of course.
You could form a contract with your co-share owners describing how you allocate that benefit, just like would be necessary with a house with co-owners.
I have no idea if that happens, but it's certainly just as possible.
I voted for part of a politician in my electorate.
They are all held by 'Depository Trust Company' in the name of 'Cede and Company'.
https://en.wikipedia.org/wiki/Depository_Trust_Company
https://en.wikipedia.org/wiki/Cede_and_Company says
> Cede technically owns substantially all of the publicly issued stock in the United States.[2] Thus, investors do not themselves hold direct property rights in stock, but rather have contractual rights that are part of a chain of contractual rights involving Cede.[3]
Modifying the last link in that chain isn't such a big deal.
I still wonder what might happen if the broker went bust and owed X different people various fractions of a single Berkshire share.
Legal liabilities ultimately are generally settled in dollars, though if an entity “goes bust” they tend to be written off or resolved at a small fraction of their theoretical worth based on the liquidation value of the remaining assets.
Your arrangement with your broker for fractional shares is similar, though not identical. They're not just selling you a derivative product that they may optionally hedge with BRK/A.
Well, a share of stock can have two true owners, it's just that public stocks don't.
The legal ownership structure isn't hard to find out; it is actually mandated by law. All publicly traded stocks are owned by the company set up for that purpose. Doesn't matter whether you're the contractual owner of a tenth of a share or the "sole owner" of a full share; the share is owned by DTCC.
share (noun) 1) a part or portion of a larger amount which is divided among a number of people
Suppose you buy one share of a company that has a thousand shares outstanding. You now own one thousandth of the company, or 1/1000 of the company.
Suppose instead you buy one thousandth of a share. Now you own a thousandth of a thousandth, 1/1000/1000. Or you can call it a millionth of the company, 1/1000000. It's the same number either way you write it.
The point is that a share is already a fraction, and it's no great leap to have a smaller fraction than that.
They also provide indivisable benefits: the right to vote, and the right to inspect company documents.
The solution to owning "a thousandth of a share" is a stock-split, where the smallest fraction is still one share.
A follow-up question since you know more about this than I do: if some number of people each buy a fraction of a share, who gets to vote that share, nobody? Does it become effectively a non-voting share?
However the vote could be exercised by whatever entity actually owns the whole share. That would be entirely a decision for the people who chose to divide up the resource. Presumably BH will only accept a single binary vote per share, so it would be up to the owners of the fractional share to agree (or not).
But: if there was demand, Robinhood could totally offer fractional shares with voting rights.
For each vote, there's typically only a finite number of possibilities.
So Robinhood could just pool the voting intentions for everyone with factional shares, and then vote the whole shares accordingly.
(To be really nice, Robinhood would just own a small handful of extra shares, so that they can round up those pooled votes to full integers.)
If you take the example of Robinhood, here's the relevant section[1].
> "I understand that fractional shares within My Account (i) are unrecognized, unmarketable, and illiquid outside the Robinhood platform".
[1] https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%2... [Section 27]
If you Google (or DuckDuck) "fractional share ownership", you will find a bunch of hits with a list of brokerages and an explanation about how it works.
I assume these products are "captive audience" -- you must buy or sell your fractions with the same broker. Thus, they cannot be transferred to other brokers. That said, I also assume it a very price competitive product so the margins would be thin and prices fair.
So his stock can’t be bought by small players.
I own B shares. It doesn’t bother me that I have fewer voting rights because I trust my fellow Berkshire owners. So there’s little barrier to entry in merely owning a small stake in Berkshire’s economic output.
Second, if you want to argue there’s a barrier to entry for voting purposes, that also doesn’t make sense: you need to have a ton of ownership in any stock to make a difference in ownership as an outside investor. It doesn’t matter if the share price is $1 million or $10 if I need $50 million in share value to make a dent in voting.
Third, Buffett has stated that he doesn’t want to split shares because he wants to encourage long-term owners. There’s a lack of liquidity in A shares; I’ve heard usually only about 1,200 trade a day. He, and I’m sure many other Berkshire shareholders, want their fellow shareholders to think like long-term owners of a private business, especially for shareholders with a lot of voting influence. A high share price and its corresponding low liquidity encourages that.
It’s not like they haven’t seen this coming for literal years.
Maybe they were assuming he’d give in?
1. Many retail investors do not have the funds to buy a full share.
2. Anyone who makes a spreadsheet containing the share prices of largest companies has to make that column wide enough to accommodate 6 digit numbers.
If not having power, that seems upsetting. But...thats how power works, otherwise it isn't powerful.
Shares, whether in one class or many, are packages of claims against the company, not really ownership of the company in the simple sense. That’s fairly fundamental to the corporate form as distinct from, say, partnerships.
That is a feature, not a bug
This also leads to those dodgy partial share adverts targeting younger unexperienced investors which is not a good thing in the long run.
Also, to give credit to your answer, >5K CHF is more than 5K USD! Looks like CHF->USD is about 1.09 right now.
But note: they’d also only trade once a month or so.
More like a deliberate plan to concentrate voting control.
You can perfectly well buy Berkshire Hathaway without plonking down a half million dollars--there are class B shares. It's just class B shares don't have anything like the voting power that class A shares have. Class A shares can be divided up into class B shares but you can't combine class B shares to make a class A share. The result is the owners of the class A shares have voting power far beyond their percentage of the company.
Warren Buffet has no need for a market in class A shares to even exist. The common man should buy class B.
Samseong in Korea also had (has?) a huge stock price that used to cause issues.