By Eric Rosenbaum 01/20/10 – 05:01 PM EST
OMAHA, Neb. (TheStreet) — Berkshire Hathaway(BRK.B Quote) was up more than 4.3% on Wednesday afternoon, on close to 7 times its average level of daily trading — with 233,000 shares traded versus an average of 34,000.
On Tuesday, Berkshire traded at a level of 100,000 shares, which was itself the highest trading level in the Warren Buffett stock since November.
Why all the fuss? It wasn’t that Warren Buffett was on CNBC saying one of his investments, Kraft (KFT Quote), had made a bad deal for Cadbury(CBY Quote). Or that Buffett berated President Obama for the bank tax.
No, the real reason: Berkshire Hathaway shares are going to $66 on Thursday.
Shareholders of Warren Buffett’s investment company approved on Wednesday a plan to split Berkshire’s B shares 50-to-1, bringing the share value down from near $3,300 to the S&P 500-worthy level of $66.
While S&P has not commented on the potential addition of Berkshire to the famed index, analysts who cover Berkshire stock believe it is likely. What’s more, economists that track S&P 500 additions have noted that a stock like Berkshire Hathaway can receive a big bump from inclusion in the index.
The 4.3% spike in Berkshire Hathaway’s share price on Wednesday was equal to $144, raising the share’s value to $3,476.
Other than the one day in November — Nov. 4 — when Berkshire traded above 100,000 shares, Warren Buffet’s stock hasn’t seen a level of activity above 100,000 shares in one day since last March. Two days in a row with elevated trading, and two consecutive days during which trading has more than doubled, is notable for Berkshire Hathaway stock.
Maybe investors are preparing for the S&P 500 bump.
— Reported by Eric Rosenbaum in New York.
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