A Fractional Solution to a Stock Market Mystery

Robert Bartlett, Justin McCrary and Maureen O’Hara

Financial Analysts Journal, 2025, vol. 81, issue 3, 5-26

Abstract: Starting in February 2021, surging Berkshire Hathaway-A volume mystified market watchers. Averaging 375 shares for a decade, daily volume rose to over 20,000 shares, then plummeted nine-fold in June 2024. We demonstrate that the increased volume was nonexistent—the result of reporting rules, retail trading, and fractional shares. Phantom volume created dislocations in BRK.A's relationship to BRK.B, missed arbitrage opportunities, higher trading costs, and incentivized manipulation. Its subsequent reduction was also due to regulatory change. We argue that short-sighted regulations impose a new “limit to arbitrage”, and improving transparency in the national market system is the real mystery to solve.

Date: 2025
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DOI: 10.1080/0015198X.2025.2489924

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