We came across a bullish thesis on Bel Fuse Inc. on Value & Error’s Substack. In this article, we will summarize the bulls’ thesis on BELFA. Bel Fuse Inc.’s share was trading at $192.34 as of January 27th. BELFA’s trailing and forward P/E were 38.94 and 28.09 respectively according to Yahoo Finance.
Bel Fuse Inc. designs, manufactures, markets, and sells products that power, protect, and connect electronic circuits. BELFA presents a compelling share class arbitrage opportunity due to the disparity between its two share classes. The company has BELFA shares, which carry voting rights, and BELFB shares, which do not, but are entitled to at least a 5% higher dividend to compensate for the lack of voting power. Historically, the two share classes have traded close to parity, with BELFA occasionally commanding a premium, reaching an all-time high of 142% over BELFB in 2022 and an all-time low of 72% in 2018.
Currently, BELFA shares trade at 91% of BELFB shares, and the dividend yield on BELFA is at a historic low, highlighting the unusual mispricing. Large institutional holders, including Gabelli Funds, are actively pushing for a proposal to collapse the dual-class structure, which could unlock substantial value for BELFA shareholders. Similar proposals in the past were blocked by a governance clause that limits the voting influence of Class A shareholders holding more than 10% of the class, but renewed pressure and coordination among major holders increase the likelihood of action.
This situation creates a unique opportunity for investors to capture value if the structure is simplified, as the relative undervaluation of BELFA shares versus BELFB may correct sharply upon any corporate action. Given the historically tight trading relationship between the two classes and the potential catalyst from activist-driven governance changes, Bel Fuse represents a low-risk, high-reward arbitrage situation where strategic corporate governance developments could drive a rerating of the class A shares relative to class B, while also highlighting the long-term undervaluation embedded in the current share price dynamics.
Previously, we covered a bullish thesis on Bel Fuse Inc. (BELFA) by Pound the Rock Investing in March 2025, which highlighted the company’s operational improvements, Enercon acquisition integration, margin expansion, and growth outlook, with a potential 50% upside. BELFA’s stock price has appreciated by approximately 172.50% since our coverage. Value & Error shares a similar perspective but emphasizes the share class arbitrage between BELFA and BELFB and the potential value unlock from collapsing the dual-class structure.
