[thisnotmyacc]

Not so much "heavily discounted shares" but "lower price to earnings valuations". PE ratio differences are how companies like Berkshire Hathaway use arbitrage to increase their value. They take the difference between a private entity's PE (2-4 X) vs public (17.94 in the case of the Berk beast) to increase the value of their stock.

This is both Voodoo economics (how is $1 million a year profit worth $4 mil in one scenario, and $17.94 in another?) as well as somewhat logical, as public companies have more rules and transparency (in theory, if not always in practice) that make a profitable more public company more stable.