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Berkshire Hathaway Inc. Message Board

  • philvalue philvalue Jan 11, 2004 9:07 AM Flag

    A shares, Buying and Selling

    Let me ask this question. What does it cost and how easy is it to accomplish the buying and selling of A shares in your accounts at the various brokerage houses used by all assembled in this digital community?

    I am using a full service broker because of business reasons with my company. I was in a position to sell 19 A shares at the end of 2003. (I know it is not turning out to be a great trade for now.) The first document that I received confirming the trade listed the total commission at $8,800.00. The last time I bought 15 A shares back in July in this same account I paid $115.00 for the entire trade. The broker and I have discussed this latest trade, he corrected the "mistake", and now my total commission charged is $150.00. Going forward with trades in this brokerage account will be another thing. I want data for my discussions next week with this broker. Please give specifics for A shares traded with both full service and on line accounts.

    I have an E-trade account and I have not figured out how to buy and sell A shares in that account. Am I missing something there?

    Thanks in advance.

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    • >>when using an internet bank account. Everything is just great with an internet bank except when you might want to talk to somebody...>>

      My internet bank (Everbank.com) has had EXCELLENT service for me for over three years. There is ALWAYS someone to take my call, they treat me as if I was just in the office an hour ago ("Hi Mr. Novice..."), and they have NEVER botched a single thing.

      Bank envelopes (pre-paid) for deposits, free bill pay, extrememly nice intrest rates (relatively speaking, of course), and a wide range of services. Who needs a branch?

      They also rebate my ATM fees I pay to use everyone else's ATMs. I just can't imagine it can get better than this.

      -Novice

      ps: I have no relationship with them, other than as a satisfied customer.

    • The two best financial moves I ever made where when I decided at the last minute not to move substanital sums to "full-service" brokers.

      Most of the extra doesn't provide service, it buys yachts.



      BTW, WEB was much more excited by the investment banking and trading at Saloman than he was by the retail brokerage.

    • Well I have some good news too. I just saved a bundle on my car insurance!

    • Astra_tsar, I assume you must again be referring to Smith Barney?

      I do have some very good news for you. Your options or whatever it is that is being held for you by Smith Barney are insured up to $150 million while being held on your behalf by Smith Barney and any cash they hold on your behalf is also insured up to a maximum of $1,000,000. I don't really know how that compares with your service friendly discount brokerage firm but am I'm sure the Federal Reserve would never allow any discount brokerage firm to go insolvent. They are, you must agree, vital to the health of our economy and just could never be allowed to fail!

      Last I checked Berkshire Hathaway was holding a good bit of Well Fargo stock. I guess, much to your disgust, with all their many "gouging" fees for free services such as check printing, ATM fees, wire transfers, low rates on deposits and high rates on loans,etc. that you are not encountered when using an internet bank account. Everything is just great with an internet bank except when you might want to talk to somebody. Maybe you need to alert WB of the great investment merits of both discount brokerage firms and internet banks? I do seem to recall his interest in Saloman, a full service firm, a few year back. What on earth could he have been thinking about astral_tsar?

      Hopefully, Fidelity can handle some of those Indian foreign stocks you so covet? I think you will be in for a big surprise when you compare the price you pay versus that paid for the same security by an Indian national. But, just think how much you will be saving on commissions.

      Some parting FREE advice. Keep you chin down on your chest and you surely you can find some loose change missed by others!

      This will be my last post directed your way so you get the last word but, sadly, I won't be able to read it as I have place you on ignore.

      Toodles Cheapskate

    • Schwab would charge me $19.95 for up to 1000 shares of ANY stock (if I traded more frequently, I could get it down to $9.95). They don't handle A shares well, however. I've learned that the hard way - A's are very 'illiquid' anyway. I have not had any trouble with trading B shares at Schwab. For large share trades, Schwab is very open to negotiating the commission - just get an agreement before you trade!
      DC

      • 1 Reply to siguy2
      • I thought to mention that too, but edited much of my discourse down to a reasonable level. Now that you brought it up, though ... I am currently enjoying those discounts from Schwab, and I did NOT sign an agreement. It just happened.

        I like Schwab because they fill a niche as a full-service-styled, discount brokerage. You can talk with the trading desk if you want to. Their fixed income specialist proffered an opinion to me a couple years ago when I had a questions about the purchase MER.PRC (Merrill Lynch preferred stock) versus .PRB and PRA, when I thought the pricing was wack. You won't get that at an eTrade I don't think. And I wouldn't want it from a full service broker because I know he's only looking at his commission. The discussion with Schwab was objective and no pressure.

    • I had a bad experience that was rectified with Schwab on selling a slug of A shares. First, I put in a limit order, saw A shares trading above and below it, sat patiently thinking there were other orders in the cue ahead of me, kept watching and finally called them on the phone. I was informed that Schwab had a policy specific to BRKA shares that the fill would be made $100 above or below the quoted bid/ask, whichever disfavored the investor.

      I said that was nuts. Was told that was policy, to which I replied they can do what they have to do and I'd do the same. Later that day, the trade was "rationalized" to my satisfaction without further discussion between us. Don't know what was up with that.

      I might mention that the trade was in an IRA account and my intention was to simply swap out of A's into B's. (I know that can be done with a written request, but I had my reasons not to wait for that rigmarole.) Regardless, an order for A shares must be done by the phone, not online. Which leads me to my next thought.

      If you've got A's you want to sell outright and immediately in a cash/margin account, fine. But moving forward, just use the B's. No reason not to. The charitable donation program is history (never applicable in IRA, anyway) and you've got much greater flexiblity in the bid/ask and much faster executions.

      One other quick horror story with the A's. A friend who has a full service brokerage account at ML put in a market order to buy A shares (maybe just one) and his order was filled at the highest price the A shares traded that day. Sounds nuts, right? It wasn't that he was in cue waiting for a bundle of 10 to trade (another problem, but not this one.) It's that ML's policy on the A shares was to fill at end of the day at the highest price of the day. He got slammed big time. I've posted before what I think about that brokerage operation. So you might ask if your full service operation has any such policy. But you should really just get out of the A shares and into the B's.

      In conclusion, the B shares are the way to go moving forward. Much more flexibility on execution. And with Schwab, the rate is about $30 tops, regardless of the number of shares. Do not try and trade A shares through a full service brokerage. They're just looking for - indeed, inventing - ways to exploit you. The brokerage world has changed; and the previous advantages of trading in A shares, a throwback to the days of fixed commissions based on the number of shares, is now lost. The pendulum has swung now to favor class B shares moving forward. Full service brokerage is for patsys.

      P.S. There was a recent thread about recommending investment books. If you can find Fred Schwed's "Where are all the customers' yachts," part of the Willey Classics series (eBay, Amazon, B&N) it is hilarious! But that's another thread.

      • 2 Replies to electric_booty_land
      • <<I was informed that Schwab had a policy specific to BRKA shares that the fill would be made $100 above or below the quoted bid/ask, whichever disfavored the investor.>>

        I've bought and sold As with Schwab several times since 2000 and never come across anything remotely like that.

        <<And with Schwab, the rate is about $30 tops, regardless of the number of shares.>>

        Only up to 1000 shares. After that it's 3 cents/share. Not a problem for BRKA/B, but ridiculously expensive for SNET.OB.

        BTW, E-Trade does now have personalized service for larger accounts. They assign you a personal broker, etc. Some are quite helpful, others less so, but they're all objective because they not paid on commission.

      • Thanks to all that have responded to my query. I appreciate the information and it helps me a lot. I also appreciate not being slammed by you guys (and gals if that applies) for being the dinosaur myself for still trading with a full service brokerage house.

        Here is the actual data from the trade on 12/31/04
        19 shares at $84,325 Amount $1,602,175.00

        Minus Processing fee 5.35
        SEC fee 74.99
        Charge or Mark Up/Down 8,720.24

        Net amount $1,593,374.42

        Which amounts to $8,800.58 in fees.

        I was livid that day and now I am better after the "mistake" was corrected. I have some decisions to make. Thanks one and all.

    • My experience with Fidelity, whether I buy or sell one or five A shares, it costs me the same commission, ie. $8.00.

    • Fidelity quotes me my normal under-1000-shares commission: $8.00 to sell 19 shares of BRKA online. I haven't actually traded A shares, that is only the automatic quotation for the commission.

    • <<I have an E-trade account and I have not figured out how to buy and sell A shares in that account. Am I missing something there?>>

      Perhaps not, when I did have an E-Trade account, you had to talk to a human to trade BRK/A. But the last time I did that at E-Trade was a couple years back, so something might have changed.

    • I sold 3 A shares through Fidelity and the commission was $26.80. It was the regular $14.95 plus some additional fees that I never saw before but I guess it didn't bother me much when you look at the commission as a percent of the transaction amount.

      • 1 Reply to parker19255
      • Schwab charged me $83 to buy my A's. They have a screwy system where you can purchase fractional shares (1/10s), but you have to purchase them over the phone. In my case, the person handling it didn't know how to do it and had to talk to their boss.

        I wonder what they'll do if BRKA ever pays a dividend? Keep the fractional pennies?

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