Bel Fuse Inc. (BELFA): A Bull Case Theory

We came across a bullish thesis connected Bel Fuse Inc. connected Value & Error’s Substack. In this article, we volition summarize the bulls’ thesis connected BELFA. Bel Fuse Inc.'s stock was trading astatine $192.34 arsenic of January 27th. BELFA’s trailing and guardant 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 link physics circuits. BELFA presents a compelling stock people arbitrage accidental owed to the disparity betwixt its 2 stock classes. The institution has BELFA shares, which transportation voting rights, and BELFB shares, which bash not, but are entitled to astatine slightest a 5% higher dividend to compensate for the deficiency of voting power. Historically, the 2 stock classes person traded adjacent to parity, with BELFA occasionally commanding a premium, reaching an all-time precocious of 142% implicit BELFB successful 2022 and an all-time debased of 72% successful 2018.

Currently, BELFA shares commercialized astatine 91% of BELFB shares, and the dividend output connected BELFA is astatine a historical low, highlighting the antithetic mispricing. Large organization holders, including Gabelli Funds, are actively pushing for a connection to illness the dual-class structure, which could unlock important worth for BELFA shareholders. Similar proposals successful the past were blocked by a governance clause that limits the voting power of Class A shareholders holding much than 10% of the class, but renewed unit and coordination among large holders summation the likelihood of action.

This concern creates a unsocial accidental for investors to seizure worth if the operation is simplified, arsenic the comparative undervaluation of BELFA shares versus BELFB whitethorn close sharply upon immoderate firm action. Given the historically choky trading narration betwixt the 2 classes and the imaginable catalyst from activist-driven governance changes, Bel Fuse represents a low-risk, high-reward arbitrage concern wherever strategical firm governance developments could thrust a rerating of the people A shares comparative to people B, portion besides highlighting the semipermanent undervaluation embedded successful the existent stock terms dynamics.

Previously, we covered a bullish thesis connected Bel Fuse Inc. (BELFA) by Pound the Rock Investing successful March 2025, which highlighted the company’s operational improvements, Enercon acquisition integration, borderline expansion, and maturation outlook, with a imaginable 50% upside. BELFA’s banal terms has appreciated by astir 172.50% since our coverage. Value & Error shares a akin position but emphasizes the stock people arbitrage betwixt BELFA and BELFB and the imaginable worth unlock from collapsing the dual-class structure.