By: Elliot Turner
About two weeks ago, Berkshire Hathaway (BRK.B) completed a 50-for-1 stock split of their “B” shares which placed BRK.B front-and-center on many traders platforms. On its first day, post-split, the stock gapped above significant short-term resistance in the $70 area and traded higher on nice volume. After a brief battle with the $70 area, the stock ultimately backtested and held its breakout before marching to new 52-week highs. With Berkshire set to join the S&P 500 today after the close, I thought it would be a great opportunity to take a look at 60 minute chart of Berkshire’s trading since the split.
Even on a split adjusted basis, one can clearly see the growth in volume following the stock split. While Buffet has often attracted attention, he now has every trader, investor and market follower closely watching and participating in the trading of his company’s stock. In trading over the past month, we can see the emergence of a strong trendline on the 60 minute chart. It will be interesting to see if shares can make a new 52-week high today; or whether the actual event of S&P membership will trigger some selling from some pre and early post-split shareholders.
Prior to the split, the S&P had rallied by about 50% off of the March 2009 lows, while Berkshire had barely rallied over 20% above that level. Since that time however, Berkshire has significantly narrowed the gap in performance since the lows (this is due to both Berkshire’s stellar performance and the S&Ps recent correction). As it stands now, Berkshire has tacked on 40% since the March bottom, while the S&P has added 43%. Now that the two are near parity post-bottom, I will be watching closely to see if any concrete relationship develops between BRK.B and the performance of the broader indices.
