Berkeley CSUA MOTD:Entry 48803
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2025/05/24 [General] UID:1000 Activity:popular
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2007/12/14-19 [Computer/SW/Languages/Java, Industry/Startup] UID:48803 Activity:nil
12/13   What is the difference between A share and B share (priority?) in a
        stock?  I am seeing a 10x price differential in BRK.A and BRK.B but
        with the same earning power.
        \_ It is different in every company. With BRK, the A is actually
           worth 33 B shares. They don't have the same earning power. With
           companies like GOOG, it has to do with how many votes each
           is worth.
           \_ In the case of GOOG most shares are worth no votes, which is
              yet another reason not to own that POS. The Class B shares
              are the powerful ones, but good luck buying any.
           \_ Wrong. http://www.berkshirehathaway.com/compab.html
              \_ Thanks for the straight skinny. I guess the A is actually
                 worth 30 B shares.
2025/05/24 [General] UID:1000 Activity:popular
5/24    

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Cache (1932 bytes)
www.berkshirehathaway.com/compab.html
Class A and Class B Common Stock Berkshire Hathaway Inc. has two classes of common stock designated Class A and Class B A share of Class B common stock has the rights of 1/30^th of a share of Class A common stock except that a Class B share has 1/200^th of the voting rights of a Class A share (rather than 1/30^th of the vote). Each share of a Class A common stock is convertible at any time, at the holder's option, into 30 shares of Class B common stock. This conversion privilege does not extend in the opposite direction. That is, holders of Class B shares are not able to convert them into Class A shares. Both Class A & B shareholders are entitled to attend the Berkshire Hathaway Annual Meeting which is held the first Saturday in May The Relative Prices of Berkshire Class A and Class B Stock The Class B can never sell for anything more than a tiny fraction above 1/30^th of the price of A When it rises above 1/30^th, arbitrage takes place in which someone perhaps the NYSE specialist buys the A and converts it into B This pushes the prices back into a 1:30 ratio. On the other hand, the B can sell for less than 1/30^th the price of the A since conversion doesn't go in the reverse direction. All of this was spelled out in the prospectus that accompanied the issuance of the Class B When there is more demand for the B (relative to supply) than for the A, the B will sell at roughly 1/30^th of the price of A When there's a lesser demand, it will fall to a discount. In my opinion, most of the time, the demand for the B will be such that it will trade at about 1/30^th of the price of the A However, from time to time, a different supply-demand situation will prevail and the B will sell at some discount. In my opinion, again, when the B is at a discount of more than say, 2%, it offers a better buy than the A When the two are at parity, however, anyone wishing to buy 30 or more B should consider buying A instead.