The price of Berkshire Hathaway stock has almost reached the “maximum number that can be stored” in computers, according to a recent article in The Wall Street Journal.
Earlier this month, Nasdaq reportedly suspended broadcasting prices for Class A shares of Berkshire on several popular data feeds that provide real-time price updates for online brokerages and financial websites.
“Nasdaq’s computers can only count so high because of the compact digital format they use for communicating prices,” the article reports, adding that the index is “rushing to finish an upgrade later this month that would fix the problem.” The issue (also faced by exchange operator IEX Group), described as the “stock-market version of the Y2K bug,” is becoming an increasingly urgent matter as Berkshire shares have reportedly risen more than 20% this year.
“At the root of the problem,” the article states, “is Mr. Buffett’s decades long refusal to execute a stock split.” The investing legend has defended his stance to shareholders by saying that a lower share price would bring unsophisticated short-term investors into the stock.
Decades ago, the article says, it was rare for any stock to trade over $100 a share. Over the years, however, any executives have mimicked Buffett in refusing to split stocks, which has reportedly “prompted consternation among some stock-market observers who say the market works better when share prices aren’t so high.” Georgetown University finance professor James Angel argues that such elevated share prices result in higher trading costs for investors. “I’m a big fan of Warren Buffett,” Angel said, adding, “but this is one area where I disagree with him.”