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Switching out Liberty Media C shares for A shares

August 20, 2014

Sorry, I’m vacationing away from my usual haunts and the beach and sun have more allure than typing away on an old laptop. Thus the lapse in blogging. I have been following the market, but don’t find anything particularly interesting happening outside of some closed-end fund tender offers (maybe I’ll go into those on a different post).

Last week when the Liberty Media C (LMCK) shares traded at a premium to the Liberty Media A (LMCA) shares I sold the C shares I had purchased/received in the ‘dividend’ transaction and purchased the same number of A shares. It wasn’t the gain that I was after, but the relative value between the two classes of shares simply didn’t make sense. Both the A shares and the C shares have the same economic interest in the Liberty Media properties. The only difference is the A shares have a vote at the annual meeting while the C shares do not. When I purchased additional C shares (after the ‘dividend’) they were trading at something like a 4% discount to the A shares. I thought that that discount didn’t make sense, as the vote didn’t seem to be that valuable (given that Malone controls the company with his B share votes). But to have the ‘vote’ be worth less than zero, a liability? That certainly didn’t make sense either.

If the C shares fall to a greater than 5% discount I may switch back again, but the current discount between the A and C shares looks just about right, less than one percent but greater than zero.

One Comment
  1. Dan permalink

    I would like to hear your thoughts on the closed end fund tenders. How are you thinking about them since they are not odd lots?

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