Switching out Liberty Media C shares for A shares
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.