Message Font: Serif | Sans-Serif
No. of Recommendations: 1
Several years ago, there were periods of time when the Class B shares traded at persistent discounts to the Class A. This is an old chart that I made when the discount was particularly unusual back in 2008-09 (back then the ratio was 30 Bs per 1 A - this was before the 50:1 B split):

Most of the time, the ratio should be roughly 1500 B per 1 A but sometimes this gets out of whack. In theory, the Bs should never trade at a premium to the As because of the conversion rights of the A shares. A shareholders can convert to B shares but B shareholders cannot convert their shares to As.

I haven't looked at the ratio in a long time but my impression is that it has been pretty close to 1500:1 for a long time, especially since the B split and the addition of Berkshire to the S&P 500.

As much as I used to look at this, I never made a dime on this supposed "arbitrage" and I wonder if anyone did. Surely there were better ways to occupy my time in early 2009 so I consider looking at the issue a waste of time in retrospect.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.