Class A shares can be converted into equivalent class B shares at any time, but not vice versa. For holders of Class B shares, they can only convert by selling Class B shares first and then buying Class A shares with the same value.
Buffett declared that Class A shares will never be split, because he believes that such high-priced shares can attract like-minded investors, that is, investors who pay attention to long-term profits rather than short-term stock price changes. As of May 20 17, the share price of Berkshire Hathaway's Class A shares was close to $246,000.
1996, Buffett created B shares for Berkshire Hathaway, which provided investors with the ability to invest in the company at an initial price only equivalent to one thirtieth of the price of A shares. By 20 10, the company had split B shares by 1:50, making the price ratio of B shares to A shares one of 1500. Correspondingly, the voting rights of B shares are also small. Buffett said that the purpose of creating B shares is to give small investors the opportunity to directly invest in Berkshire Hathaway, rather than indirectly investing in the company only through mutual funds.
For investors, one advantage of holding B shares is flexibility. If an investor only holds a class A stock of Berkshire Hathaway, when the investor is in urgent need of cash, his only choice is to sell the stock, even if the price is much higher than the amount of funds required by the investor. In contrast, holders of Class B shares can sell part of their shares, and only need to reach the amount of capital they need. Another advantage of holding Class B shares is that because the price is much lower than that of Class A shares, investors can pass it on to their heirs without triggering the gift tax, while Class A shares cannot.