Stocks with dual-class shares will likely lose another member in the not-too-distant future. 

On July 29, Lions Gate Entertainment (NYSE:LG.A) announced that it would move ahead with its plan to eliminate its dual-class share structure by offering to pay its Class A shareholders a 12% premium on their shares. If shareholders approve, Lion’s Gate will become a “one share, one vote” company that institutions prefer. 

The company reached this point after deciding last December to spin off its studio business and Starz TV network into separate publicly traded companies. 

The studio business would merge with Screaming Eagle Acquisition Corp., a SPAC (special purpose acquisition company) run by Hollywood bigwigs Eli Baker and Harry Sloan. The deal valued the merged entity at an enterprise value of $4.6 billion and was completed on May 13. 

Lionsgate Studios (NASDAQ:LION) began trading on May 14. Lions Gate Entertainment owns 87.3% of Lionsgate Studios, and the SPAC investors own 12.7%. 

While institutions might love single-class share structures, stocks with dual-class shares aren’t always bad. Here are three examples of the good ones.

Berkshire Hathaway (BRK.A, BRK.B)

Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) didn’t always have a dual-class share structure. That came into being in May 1996. 

Warren Buffett created Class B shares for two reasons: First, the Class A shares had grown to $36,000 a share, making them tough for average investors to own. Second, because the Class As were so expensive, unit investment trusts were being formed to buy Class As, thereby providing smaller investors a vehicle to own the holding company. 

So, Berkshire issued 517,500 Class B shares at approximately $1.200 a share. That was 1/30th the value of a Class A share, but it represented just 1/200th of the voting power. Further, while you could convert Class A shares to Class B, you couldn’t do the reverse.

This allowed regular investors to own the holding company while Buffett maintained control of the business over the long haul. In 2010, the Class Bs were split 50-to-1 to create more liquidity for investors. 

The move created an even bigger demand for Berkshire Hathaway stock. Plenty of investors are pleased he decided to create a dual-class share structure.

Bentley Systems (BSY)

Bentley Systems (NASDAQ:BSY) is listed directly before Berkshire on the Council of Institutional Investors’ list of companies with dual-class share structures. 

Bentley develops software for the construction, architecture, and infrastructure industries. I first recommended its stock in April 2021. Founded by the Bentley brothers in 1984, it went public in September 2020. 

There are four Bentley brothers on the board, including Executive Chairman Greg Bentley, who stepped down as CEO on June 30. Bentley was replaced by former Chief Operating Officer Nicholas Cummins. Bentley had been CEO since 1995. 

When I first wrote about it, it was trading around $50. It reached $70 on September 20, 2021, but its shares have struggled since. 

Class B shares are the only class of stock that trades. They come with one vote per share. The Class A shares have 29 votes per share. The Bentley family owns 55% of the Class B shares once all Class A are converted. 

Despite the share price woes, the business continues to grow. In Q2 2024, revenues rose 11.9%, excluding currency, to $330.3 million. Its annualized recurring revenues were $1.22 billion, 11% higher than a year earlier. Its adjusted quarterly earnings per share was 31 cents, 29% higher than Q1 2023. 

It’s priced to move. 

Dick’s Sporting Goods (DKS)

Dick’s Sporting Goods (NYSE:DKS) has Common and Class B shares. The former comes with one vote; the latter has 10 per share. Although Executive Chairman Edward Stack didn’t found the sporting goods retailer — his dad Dick (hence the name) did in 1948 — he took over as CEO in 1984 when it was just two stores. In 2021, he moved up to Executive Chairman, and President Lauren Hobart became CEO.

As of April 15, Stack had 2.42 million common shares and 13.71 million Class B shares, which represents 19.7% of the equity and 47.2% of the voting power. 

Stack took the company public in October 2002 at $12 a share. One share from the IPO is four shares today due to 2-for-1 stock splits in April 2004 and October 2007. Its share price has appreciated 6,582% since the IPO.   

I have been quite supportive of Dick’s stock over the years. As far back as 2012, I’ve recommended its stock. However, last December, I wrote that my trust in the company was shaken by its outrageous claims that organized retail crime(ORC) was primarily responsible for its 23% drop in Q2 2023 results.

Miraculously, like many retailers crying the blues about ORC, its profits took off in Q3 and Q4, leading to a 7% increasein adjusted earnings per share of $12.91 in 2023.      

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.