Comments on: Sometimes Mr. Market Really is Insane http://toshuo.com/2007/sometimes-mr-market-really-is-insane/ Chinese, Linguistics, Science, Cultural Observations and whatever else I feel like writing about Thu, 04 Dec 2008 21:44:55 +0000 http://wordpress.org/?v=2.6.5 By: Mark http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-83195 Mark Thu, 09 Aug 2007 05:59:26 +0000 http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-83195 I think the real reasons for the irrational pricing of the B shares are the extreme growth of the company and the relative lack of awareness of the different share classes. A lot of press releases trumpet Chipotle's stock, but relatively few mention the B shares. Everybody wants a piece of the action, and some aren't even aware that B shares exist, or that they have greater voting rights. Berkshire Hathaway, on the other hand, is less hyped, and much better understood. Its share structure has been around for a while, and it's been discussed thoroughly. When the dust settles, Chipotle's B shares will almost certainly be higher. I'm not interested in arbitrage, though. There's no way to know exactly <i>when</i> the dust will settle. I think the real reasons for the irrational pricing of the B shares are the extreme growth of the company and the relative lack of awareness of the different share classes. A lot of press releases trumpet Chipotle’s stock, but relatively few mention the B shares. Everybody wants a piece of the action, and some aren’t even aware that B shares exist, or that they have greater voting rights.

Berkshire Hathaway, on the other hand, is less hyped, and much better understood. Its share structure has been around for a while, and it’s been discussed thoroughly. When the dust settles, Chipotle’s B shares will almost certainly be higher.

I’m not interested in arbitrage, though. There’s no way to know exactly when the dust will settle.

]]> By: ZhongTang http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-83120 ZhongTang Thu, 09 Aug 2007 02:46:38 +0000 http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-83120 About the difference between each class of common stock, I also this info on <a href="http://phx.corporate-ir.net/phoenix.zhtml?c=194775&p=irol-irhome" rel="nofollow">CMG's website</a> : <i>Class A common stock has one vote per share and Class B common stock has 10 votes per share, except that for purposes of approving a merger or consolidation, a sale of all or substantially all of Chipotle’s property or a dissolution of Chipotle, shares of Class B common stock have only one vote per share. A full description of voting rights may be found in Chipotle’s most recent Form 10-K, which is available under “SEC Filings”. </i> I would still buy Class B, but multiple voting rights might disappear when you will really want to use them, as in the case of a merger. About the difference between each class of common stock, I also this info on CMG’s website :

Class A common stock has one vote per share and Class B common stock has 10 votes per share, except that for purposes of approving a merger or consolidation, a sale of all or substantially all of Chipotle’s property or a dissolution of Chipotle, shares of Class B common stock have only one vote per share. A full description of voting rights may be found in Chipotle’s most recent Form 10-K, which is available under “SEC Filings”.

I would still buy Class B, but multiple voting rights might disappear when you will really want to use them, as in the case of a merger.

]]> By: ZhongTang http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-83116 ZhongTang Thu, 09 Aug 2007 02:34:47 +0000 http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-83116 You should read this February 2007 text that explains the reason behind the Chipotle Mexican Grill price "abnormality", which is more normal than what you think. <b>Law of One Price: Works for Berkshire, But Not Chipotle Mexican Grill</b> http://seekingalpha.com/article/28025 You should read this February 2007 text that explains the reason behind the Chipotle Mexican Grill price “abnormality”, which is more normal than what you think.

Law of One Price: Works for Berkshire, But Not Chipotle Mexican Grill
http://seekingalpha.com/article/28025

]]> By: Mark http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-82846 Mark Wed, 08 Aug 2007 04:34:05 +0000 http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-82846 I did pretty much all of my research via Google Finance, but the way to distinguish between the two classes of stock is the ticker. The A shares are CMG, and the B shares are CMG.B. I did pretty much all of my research via Google Finance, but the way to distinguish between the two classes of stock is the ticker. The A shares are CMG, and the B shares are CMG.B.

]]> By: Nathan http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-82837 Nathan Wed, 08 Aug 2007 03:39:26 +0000 http://toshuo.com/2007/sometimes-mr-market-really-is-insane/#comment-82837 Interesting. I just started investing recently. Would you telling me how you distinguished between the two classes of stock on your Ameritrade account? I haven't figured that out yet... Interesting. I just started investing recently. Would you telling me how you distinguished between the two classes of stock on your Ameritrade account? I haven’t figured that out yet…

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