Some smart investors see value in Mueller Water Products (MWA). They’re probably right; but, Mueller isn’t the kind of situation that jumps out at me as a clear bargain I can understand. However, there is something peculiar about this situation that makes it worth writing about. (Note: The information in this article was current as of Friday, April 6th, 2007 please consult current market quotes).
There are two shares of Mueller Water Product common stock Series A common stock and Series B common stock. There are roughly three times as many B shares as A shares. The A shares and B shares have identical economic rights. So, ownership of all of the B shares would provide a roughly 75% economic interest while ownership of all of the A shares would provide a roughly 25% economic interest.
Here’s where things get interesting. “Shares of Series A common stock and Series B common stock generally have identical rights in all material respects except Series B shares have eight votes and each Series A share has one vote per share.”
So, what’s the premium on the B shares? There is none. The last trade on Mueller A shares (MWA) was...
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