Ask TheStreet: Delistings

If a company's fortunes change for the better while its shares are trading on the OTCBB, then it may try to get its shares relisted on one of the major exchanges. In order to make this big step back to the majors, however, it must once again pass all the initial listing requirements set by that exchange.

What are the potential benefits or pitfalls of buying the stock of company "A" when it owns 50% of company "B," instead of buying company "B" directly? Thanks, M.F.

Well, you could buy shares of publisher Washington Post(WPO Quote), which is 18% owned by Warren Buffett's Berkshire Hathaway(BRK.A Quote). Or you may choose to own Moody's (MCO Quote) or White Mountain Insurance Group(WTM Quote), which each have 16% of their shares controlled by Berkshire.

Or perhaps pick up a position in financial services providers American Express(AXP Quote) or Ameriprise Financial(AMP Quote), both of which are 12%-owned by Berkshire.

Or you could just buy shares in Berkshire itself, one of the best-performing stocks in the history of the market and managed by the world's most famous investor. (Probably, you'll pick up the "B" shares, since they go for just under $3,000 a share. The "A" shares currently change hands at closer to $90,000!)

Of course, not every company has Berkshire's impressive track record. But Berkshire is a good example of the positive aspects in buying the parent or holding company instead of investing directly in one of its holdings. Basically, you participate in the subsidiary's upside, plus you get diversification -- and maybe more upside -- from the parent's other businesses. (Since Berkshire does not own a controlling interest in the above businesses, it is not technically a parent/subsidiary relationship, but hopefully you get the point.)

On the other hand, by owning the parent company instead of its subsidiary, you may also be penalizing yourself by missing out on some serious gains if the unit sees more growth than the parent.

Shares of asset manager BlackRock(BLK Quote), for example, significantly outperformed its parent PNC Financial Services(PNC Quote) after PNC took a 70% stake in BlackRock in 1995.