We’re buying 40 shares of Constellation Brands (STZ) at roughly $244.94 each. Following the trade, the portfolio will own 280 shares of STZ, increasing its weighting in the portfolio to 2.25% from 1.93%. We are using this morning’s dip to add to our position in the maker of beer, wine and spirits — slightly improving our average cost basis. Nielsen published data this morning on channel sales in the United States for the four weeks ended May 21, which showed that Constellation Brands continues to outperform peers and pick up market share in beer. According to that data, total Constellation Brands sales (including flavored malt beverage and cider) increased 12.3% year over year, much faster than the beer category’s sales growth of 1%. We believe this data supports our view of the positive momentum in Constellation Brands’ leading beer portfolio, which includes Corona, Modelo, and Pacifico, the kind of beer people love to drink when they go out in summer months. In other news, we hope an update on Executive Chairman Bob Sands’ proposal to transition to a single class structure is coming soon. We have not seen a formal update since the proposal was announced in early April , but Gordon Haskett’s Don Bilson wrote this morning that if an update was to happen, it could be soon. He says the timing could be right because the company’s last six proxies were released in early June. If Constellation Brands’ special committee wants to pursue this deal, Bilson said it would want the proxy out so it could be voted on at the annual shareholder meeting in July. As a reminder, the Sands family proposed the conversion of each of its Class B common stock for 1.35 shares of Class A common stock. Outside of any near-term noise related to the 35% premium that the Sands family is seeking — and 35% may be too high — and the shareholder dilution that comes with it, we think this event would be long-term positive for shareholders for a couple reasons. First, if the company gets rid of its dual-class structure, we think STZ could see a flood of new investors. All else being equal, investors prefer buying stocks with single-class structures and the effect of new money could push up the stock’s price-to-earnings multiple. Second, the overhang related to the Sands family’s voting control will be removed. The Sands family’s voting power would drop from 59.5% to about 19.7%, limiting its ability to push through unpopular and expensive mergers and acquisitions (like Canopy Growth Corp and Ballast Point) and unfriendly capital allocation policies. (Jim Cramer’s Charitable Trust is long STZ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
