Market Cap Issues on Websites
Hi Everyone,
This might be a fairly straightforward question but I found a few differences in Market Cap values for Moelis and Co. on different websites. I've seen differences for other companies as well but this one stood out the most.
Bloomberg: $2.315B ( http://www.bloomberg.com/quote/MC:US )
CNBC: $1.4M ( http://data.cnbc.com/quotes/MC )
Yahoo Finance: $553.93M ( http://finance.yahoo.com/q/ks?s=MC+Key+Statistics )
Seeking Alpha: $549.81M ( http://seekingalpha.com/symbol/MC/earnings_news )
Could anyone explain why? $2.315B vs $549.81M is a huge difference, just confused on how that could happen. Also any advice on which sources may be more reliable to use?
Thanks.
Could be free float vs. non free float. The shares outstanding may not be up to date either on certain sources.
Moelis is a good example of why these differences happen. Three statements from their latest 10-q:
(A) As of April 28, 2016, there were 20,462,658 shares of Class A common stock, par value $0.01 per share, and 31,227,596 shares of Class B common stock, par value $0.01 per share, outstanding.
(B) Class A partnership units may be exchanged for Moelis & Company Class A common stock on a one-for-one basis, subject to applicable lock-up, vesting and transfer restrictions. If all Class A partnership units were to be exchanged for Class A common stock, fully diluted Class A common stock outstanding would be 56,273,530 and 55,355,971 for the three months ended March 31, 2016 and 2015, respectively.
(C) In conjunction with Moelis & Company's IPO of its Class A common stock, the Company issued 36,158,698 shares of Class B common stock. Moelis & Company Partner Holdings LP ("Partner Holdings") holds all shares of Class B common stock, enabling it initially to exercise majority voting control over the Company. The economic rights of Class B common stock are based on the ratio of the Class B subscription price to the initial public offering price of shares of Class A common stock (.00055 to 1), and the aggregate number of shares of Class B common stock may be converted to Class A common stock (up to a maximum of 20,000 shares). Holders of shares of Class B common stock are entitled to receive dividends of the same type as any dividends payable on outstanding shares of Class A common stock at a ratio of .00055 to 1.
How the three sources you cited appear to be calculating (1) Class A Shares = 20.5M shares x $27.07 = $554M Market Cap (2) Class A + B Shares = 51.7M shares x $27.07 = $1.4B (3) Class A + B Shares + Class A partnership units = 87.5M shares x $27.07 = $2.4B Market Cap
Based on my quick read (I didn't read the rights of the shares/units to really understand nuances so I may be wrong), it seems like they are all wrong. Should be: Class A units + Class A shares = $1.5B (ignoring class B because its de minimis)
To answer your question, best way is to go through the filings to calculate yourself and then compare to analyst reports to see if your methodology is in the right ballpark.
Thanks for the detailed response.
Regarding your calculation, just to confirm, I'm assuming due to only up to 20,000 Class A shares possible from conversion, you chose to disregard CLass B shares.
On another note, what assumptions should one make regarding which classes of shares to include or disregard for valuation? Would it be best to convert all classes of shares and convertible securities into the same class then use that number for shares outstanding?
Obviously counting and not counting certain classes of shares would impact share price dramatically, or ,in reverse, impact EV dramatically. To the unsophisticated investor wouldn't this imply huge and misleading discrepancies in valuation?
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