No. of Recommendations: 0
Need some help please.
Have been thinking A's trade 1,500 x the B's.
A' trading at 1,535 x.
What brain wire am I crossing?
Please accept my apology if this has already been answered.
Thanks!
Silverlinin
No. of Recommendations: 7
"Need some help please.
Have been thinking A's trade 1,500 x the B's.
A' trading at 1,535 x.
What brain wire am I crossing?
Please accept my apology if this has already been answered.
Thanks!"
The A's have 1500 times the economic value of the B's, but the A's have 10,000 times the voting rights of the B's. So it is possible that the market is putting some economic value of those excess voting rights.
Also, A's are very thinly traded, as a result of this, the bid/ask spreads between the two classes of shares can occasionally get a bit wonky if the A's have not traded for a certain amount of time. Also, one A share can be converted to 1500 B shares but the reverse is not true, you cannot take 1500 B shares and automatically convert them to an A share. This means that it is really rare for A to trade for less than 1500 B shares because someone, somewhere will just buy the A shares, convert them to B shares, then sell the Bs for a profit. It is far more likely that the As trade with a premium (like you just noticed).
No. of Recommendations: 0
Thank you for your splaining the A to B World.
My unsophisticated understanding level believed it was as simple as 1,500 B' = 1 A Share.
It's more complicated than I expected. When I saw the A Shares equivalent to 1,532 shares of B Shares I seriously thought I could arbitrage a quick profit ($9k).
I was in the wrong sandbox
😂.
