They claim this is technically legal, but at the same time, very unethical. I’m sure many would argue it goes along with ‘You snooze, you lose’ reasoning.

According to the Master of None blog – this morning a trader was able to buy 50 shares of Berkshire Hathaway-B stock at a 52% discount.

For anyone that doesn’t know, Berkshire Hathaway stock – even it’s ‘B-stock’ – is one of the most profitable in the world to own. The company has proven itself to be a major money maker for anyone lucky enough to own this very expensive stock. It’s kind of like Apple, only proven over a longer time-line and without the annoying ads.

There are some investing schools of thought that even believe the best way to make money in the market is to mimic every move of Berkshire’s founder and owner, Warren Buffett. Sounds like a bad idea to me, but it works for a lot of people.

So here’s how Master of None explains how it all went down:

About 50 shares of BRK-B were sold at a 52% discount [usually sold at $4,448 per share, this dude got them for $2,147 each] . The reason this happened is that somewhere a trader put in a limit-buy order for 50 shares at $2,147, with full knowledge that the trade would likely never get filled. These types of trades are usually protective measures to prevent paying too much for a stock or selling for too little. On the off chance, however, that the day’s sell orders burn through other, higher, limit orders, and the brokers aren’t actively trading, these ‘protective’ trades can become predatory, allowing someone to buy 50 shares at a 52% discount, making $115,050 over the course of a few minutes, simply by selling them back into the market at the higher, normalized price.

So, sounds like the sellers were on auto-pilot and some clever fellow was able to slip in his cheap bid. It definitely paid off for him/her. The seller probably should have put in a similar limit to stop such a harsh ‘steal’ from going through, but I guess they forgot to?

Does anyone dispute the veracity of this claim? Or is it completely plausible?

Master of None: How To Make $100,000 by 11am, June 4, 2008 via DealBreaker