Looked at an interesting company today called Sport Chalet, Inc. They sell sporting goods and provides various lessons on skiing and scuba diving in Nevada and California. From a fundamental standpoint, the company itself is nothing interesting. It's trading for about 12x earnings (though its a bit less than it's industry peers). But it just got done with an interesting stock split, where the "Common Stock" was made into Class B, and Class B shares got 7 Class A shares as a stock dividend.
Class A common stock holds 1/20th of a vote for every share, and Class B stock holds 1 vote for every share. Class A common stock also gets 110% of dividends that Class B gets, in order to offset for any discounts that it might be trading on the market.
Currently, the Class A share is trading at a discount of about 16.7% relative to the class B. How did I figure that out?
Well, the ratio of A : B shares outstanding was 7, and the ratio of A : B market capitalization is 6. Technically, there should be no discount due to the 110% dividend provision, but alas, there is. This is a classic arbitrage opportunity! Why don't we buy a million shares of Class A and short 900,000 shares of class B!
Wait... oh snap... this company only trades about 5,000 shares a day... poop.
The entire company is worth about 140m--A and B combined.
Pick it up for the PA and make some pocket change if you'd like, but this can't possibly go in the IAG porfolio (at 2% daily volume)--since the commissions will more than offset any gains.