The Dow Jones (DJ) Board of Directors met with bankers today to discuss their next move, now that the Bancroft family rejected Rupert Murdoch's $5 billion dollar takeover bid. (The Bancroft family controls voting stock) This begs a bigger question - is it ever worth investing in a company where one owner controls its destiny?
CNBC Wall Street Reporter Melissa Lee joins the guys for this conversation.
Melissa says there are many companies with dual share structures, and two different classes of voting power. She explains the ratio is 10:1 – meaning insiders have 10 times the voting power as the average investor.
She says historically this structure has been a good investment when the company’s founder is in the CEO suite (think Google) and not so good when the CEO is a descendant (think Ford.)
Tim Strazzini thinks News Corp. (NWS.A) is a buy because of the dual stock structure. The different classes keep some investors away and consequently, he thinks this stock undervalued.
Guy Adami says Cablevision (CVC) is a name he hates because of the dual share structure, although it’s worth noting the Dolan family is trying to take the company private.
On May 2, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;Strazzini Owns (C), (MPEL), (MER), (NWS-A) Bolling Owns (MPEL), Bolling Owns Natural Gas Futures “Pali Capital acts as an underwriter in the public offering of securities and structured products and the statements of Mr. Strazzini on this Program is not an endorsement of such securities or structured products or any offering of such securities or structured products.”
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