GOOGLE INC. $562 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 674.5 million; Market cap: $379.1 billion; Price-to-sales ratio: 6.1; No dividends paid; TSINetwork Rating: Above Average; www.google.com) recently handed out its new class C non-voting shares to its class A (one vote per share) and class B (10 votes per share) shareholders. Investors received one class C share for each stock held, for an effective 2-for-1 split.
The new class C shares trade on Nasdaq under the GOOG symbol, while the class A shares ($570), now trade under the new GOOGL symbol.
If voting and non-voting shares trade for roughly the same price, you are better off buying the voting shares. That’s because the voting shares sometimes go on to trade at a premium, possibly due to buying by a shareholder who is only seeking to acquire a control position, or because institutions refuse to buy non-voters.
In Google’s case, insiders control 61.3% of the votes through the class B shares. As a result, we feel the premium attached to the class A shares has little lasting value, particularly as all classes would have equal rights in the event of a takeover.
Google investors should continue to hold their class A shares, but we recommend the cheaper class C shares for new buying.
Google is a buy.
