Molex Vs. Molex: Voting Rights Worth 67 Basis Points?

May.10.12 | About: Molex Incorporated (MOLX)

How much are voting rights worth? Let's take a look at Molex (NASDAQ:MOLX).

This is an analysis of the relative yield difference between two classes of listed common stock; Molex and Molex Class A Common Stock (NASDAQ:MOLXA). They enjoy the same dividend payment. Currently set at $0.22 per quarter.

The recent price and dividend yield.

May 7, 2012:

  • MOLX, $25.65 for a 3.43% yield
  • MOLXA, $21.44 for a 4.10% yield

MOLXA offers a yield advantage of 0.67% or 67 basis points.

There are a couple of trade-offs for the yield pickup.

  • MOLXA is more thinly traded than MOLX
  • MOLXA has no voting rights

Not sure the voting rights have much value given the ownership of the firm.

Recent Dividend Announcement:

On April 25, 2012 Molex announced a $0.22 quarterly dividend payable July 25, 2012 to stockholders of record on June 29, 2012.

Molex has two class of common stock that trade on the Nasdaq market, MOLX and MOLXA. In total there are three class of capital stock.

Shares Outstanding on the Record Date

As of the close of business on September 1, 2011 there were outstanding:

  • 95,560,076 shares of Common Stock
  • 79,905,701 shares of Class A Common Stock
  • 94,255 shares of Class B Common Stock

Ownership by all directors and executive officers:

  • Common Stock 33.2%
  • Class B 93.5%
  • Class A 7.8%

Source

For investors that have confidence in the management of Molex the yield advantage of owning MOLXA over MOLX might be considered a worthwhile tradeoff.

MOLXA is owned for the yield advantage over MOLX. May increase holdings on weakness.

Disclosure: I am long MOLXA. May add on weakness. Alert is set that will trigger sell order at levels well above (10%+) the current market price of $21.44.