UPDATE 2-Berkshire Hathaway to join S&P 500, shares soar

* Berkshire to join S&P 500 following stock split

* Company replaces Burlington Northern, which it is buying

* Berkshire shares soar 7.9 percent after hours

(Adds comment, details)

By Jonathan Stempel

NEW YORK, Jan 26 (BestGrowthStock) – Standard & Poor’s said it will
add Warren Buffett’s Berkshire Hathaway Inc (BRKa.N: ) (BRKb.N: )
to its flagship S&P 500 stock index (.SPX: ), as the company
prepares to acquire railroad operator Burlington Northern Santa
Fe Corp (BNI.N: ).

Berkshire’s Class B shares rose $5.40, or 7.9 percent, to
$73.40 following the announcement after hours. Its Class A
shares, which were not split, closed down $1,449 at $101,751 on
Tuesday. They rose 8.1 percent to $110,000 after hours.

S&P’s announcement followed Berkshire’s 50-for-1 split last
week of the B shares, to make it easier for Burlington Northern
shareholders to exchange their stock for Berkshire stock in a
tax-free swap, rather than accept cash.

Berkshire will replace Burlington Northern in the S&P 500
and in the S&P 100 index of the largest blue-chip companies, on
the date to be announced.

It expects this quarter to buy the 77.4 percent it did not
already own of Burlington Northern in a transaction it valued
at about $26.4 billion.

The addition of a company to the S&P 500 often boosts its
share price because many portfolio managers try to track the
index and must buy shares of companies that enter it.

“The split provided more liquidity and index investors have
to buy the stock, which both can boost the shares,” said Steven
Check, chief investment officer of Check Capital Management Inc
in Costa Mesa, California.

“The addition to the index is something I don’t think
Warren Buffett was lobbying for, but is certainly something he
would have wanted.”

Check said his firm invests $300 million, of which 25
percent is in Berkshire stock.

Berkshire, through Buffett’s assistant Carrie Kizer, had no
immediate comment.

With a market value of about $158 billion, Berkshire is the
largest publicly-traded U.S. company not in the S&P 500.

The Omaha, Nebraska-based company had long been excluded
from the index because its shares were not liquid enough.

Last week, though, Buffett told CNBC television the stock
split could give Berkshire about 700,000 investors.

Berkshire operates roughly 80 businesses and has tens of
billions of dollars of stock and bond investments.

Its largest previous acquisition was its 1998 takeover of
the reinsurer General Re.

S&P is a unit of McGraw-Hill Cos Inc (MHP.N: ).

Stock Investing

(Reporting by Jonathan Stempel; editing Bernard Orr)

UPDATE 2-Berkshire Hathaway to join S&P 500, shares soar