Shouldn't all stocks trade at discount to company value?

[Mark1808]

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-liquidity increases a company's value. if you own the whole thing, how are you going to find buyers at the "true value"? if you need to liquidate, the company is only worth what you can sell it for.

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Very valid point IMO... although there might be such a DEMAND for certain isolated illiquid public companies,where they will pay WHATEVER "true value" they want to aquire that entity...even though it may be at a much higher premium to its peers.

In fact in most cases they HAVE to pay higher,just due to the liquidity issues alone in an example like that

SF [img]/images/graemlins/cool.gif[/img]

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The point that has been succesfully contested with the IRS is that if you have control you have the option to sell the whole thing anytime you want, not so for a minority holder. This control premium has value. Would owning 51% of a stock have more value per share then owning 100 shares?