Buffett Ensures That Investor Demand Will Drive New Shares

WASHINGTON — Billionaire Warren Buffett will rely on investors rather than brokers to carry out the coming stock sale by his investment holding company, Berkshire Hathaway Inc.

The Omaha company filed Tuesday with the Securities and Exchange Commission to sell its new, low-priced Class B stock. The documents show that Berkshire crafted a series of novel steps to make sure the driving force behind the offering, set for late May, is shareholder demand rather than Wall Street marketing.

Berkshire will provide as much stock as investors are willing to buy through the offering, rather than establish a set number of shares for the sale, the filing said. To discourage securities dealers from touting the stock, Berkshire will pay them rock-bottom commissions to distribute the securities.

These moves notwithstanding, Buffett--one of the most successful investors in U.S. history--has gone out of his way to try to prevent small investors from falling prey to the aura that media coverage has created around his record at Berkshire. In recent months, he has even publicly stated that he wouldn’t buy Berkshire common stock, or recommend that his family do so, at its current price of $34,000 a share. He also said that Berkshire Hathaway is unlikely to repeat its performance of the last 30 years.

“What Buffett is trying to do is dampen the enthusiasm of people who want to create a mythology around this offering,” said Tony Russ, a securities industry analyst with Shelby Cullom Davis & Co. in New York. “He wants demand to determine the size of the deal, not salesmanship.”

News of the stock sale, announced in February, has already generated much publicity. Salomon Brothers Inc., the sole underwriter for the Class B shares, has even set up a special telephone number for inquiries.

Berkshire filed to sell 100,000 of the Class B shares at one-thirtieth of its common stock price, which works out to $1,133 each. However, the company plans to issue as much stock as it takes to meet demand.

Before the sale, approved dealers will file daily reports on how many shares their customers are interested in buying. Berkshire plans to use an unusually high number of dealers, perhaps as many as 500, who will buy the shares from Salomon and distribute them to clients in the U.S. and Europe, according to Tuesday’s SEC filing.