Crawford & Company CRD-A/B Arbitrage

The stock market is one of the few places where two nearly identical goods are bought and sold for vastly different prices.  Consider the example of Crawford & Company, an insurance services provider based in Atlanta, GA.

Crawford has two classes of stock, Class A (CRD.A) and Class B (CRD.B).  The two classes share identical economic interests and similar liquidity profiles.  However, the Class A shares have no voting rights, while the Class B shares have votes, and thereby should command a premium.  How much of a premium?  According to currently quoted prices, B shares are currently 43% more expensive than A shares ($4.60 vs $3.20)!!

The biggest risk for potential arbitrageurs are

1. the possibility of this price discrepancy further expanding 
2. the timeliness of the convergence.

As the below graph shows, the current B-share premium of 43% is high by historical standards.  However, the premium exploded during the financial crisis - the possibility of Risk 1 clearly rises during periods of acute financial distress.  Interestingly, the spread pre-crisis ranged from 0-20%, while post-crisis, the spread has shifted upwards to a new range of 20-40%.