Meadow Valley Corporation (NDAQ:MVCO) may face increased shareholder scrutiny over its recent shareholder proposal. CD Capital Management LLC disclosed a 5.7% stake in the company and demanded in a letter to the Board of Directors that the company rethink the terms of the proposal, sell it's Ready Mix subsidiary, and explore a possible sale of the company as a whole.

CD Capital Management said that although the company's shareholder proposal would unlock value, it is flawed in its requirement to return the cash upon sale to shareholders without considering whether the cash could be more effectively reinvested in the business. Moreover, Meadow Valley's small market capitalization and "two asset" existance only complicates the situation.

The hedge fund also noted that it was pleased with the recovery in the company's stock price and management's progress towards improving operating margins while growing revenues. However, they noted, there is also a very strong market right now for construction and material assets. Consequently, the hedge fund said that they would support a sale of the company for a price higher than $18 per share when the Board of Directors is ready to explore that option.

So, what does all of this mean for shareholders? Well, the company has already announced a proposal to unlock shareholder value through a series of strategic transactions, including the sale of Ready Mix. Given that the Board of Directors is already supportive of such initiatives, it would not be far fetched to assume that they would be open to a potential sale of the company - which CD Capital's prior analysis pegs at about $18 per share or more. Combined, these factors make MVCO a stock worth watching!

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