Tracking stock

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Tracking stock or targeted stock^[1] are specialized equity offerings issued by a company that is based on the operations of a wholly owned subsidiary of a diversified firm. Therefore, the tracking stock will be traded at a price related to the operations of the specific division of the company being "tracked". Tracking stock typically has limited or no voting rights.^[1] Often, the reason for doing so is to separate a high-growth division from a larger parent company. The parent company and its shareholders remain in control of the subsidiary's or unit's operations.

Examples

During the dot-com bubble, some companies that predated the bubble identified their Internet operations as high-growth divisions that would benefit from a tracking stock. The best-known example is The Walt Disney Company, which issued a tracking stock for go.com. At around the same time the bubble ended, Disney retired the tracking stock. AT&T (AWE) and Sprint Corporation (PCS) also established tracking stocks for their cellular telephone operations, but neither of these tracking stocks is still outstanding. Liberty Media (NASDAQ: LMCA and LMCB) had tracking stocks for Liberty Interactive NASDAQ: LINTA and LINTB, Liberty Capital - formerly LCAPA and LCAPB on Nasdaq, Liberty Starz - formerly LSTZA and LSTZB on Nasdaq, and Liberty Entertainment - formerly LMDIA and LMDIB on Nasdaq, at various times since going public. However, on 25 September 2011, Liberty Capital and Liberty Starz could no longer be traded leaving only Liberty Media and Liberty Interactive as separate companies. Therefore, no major U.S. companies had tracking stocks until 9 August 2012, when Liberty Interactive issued tracking stock for itself using its current symbols and Liberty Ventures LVNTA and LVNTB on the Nasdaq.

Among other examples, in 1999 Quantum Corp. issued tracking stock in two subsidiaries: its DLT and Storage Systems Group (DSS) and its Hard Disk Drive Group (HDD). Two years later, in 2001, Quantum sold the Hard Disk Drive business to Maxtor and redeemed the HDD tracking stock.

References

↑ 1.0 1.1 SEC page on tracking stock.

External links

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Types of stocks	Common stock Golden share Preferred stock Restricted stock Tracking stock

Share capital	Authorised capital Issued shares Shares outstanding Treasury stock

Participants	Broker-dealer Floor broker Floor trader Investor Market maker Proprietary trader Quantitative analyst Stock trader Regulator

Exchanges	Electronic communication network Stock exchange opening times Over-the-counter List of stock exchanges Multilateral trading facility

Stock valuation	Alpha Arbitrage pricing theory Beta Book value Capital asset pricing model Dividend yield Earnings per share Earnings yield Dividend discount model Security characteristic line Security market line T-model

Trading theories and strategies	Algorithmic trading Buy and hold Concentrated stock Contrarian investing Day trading Dollar cost averaging Efficient-market hypothesis Fundamental analysis Growth stock Market timing Modern portfolio theory Momentum investing Mosaic theory Pairs trade Post-modern portfolio theory Random walk hypothesis Style investing Swing trading Technical analysis Trend following Value investing

Related terms	Block trade Cross listing Dark liquidity Dividend Dual-listed company DuPont analysis Flight-to-quality Haircut Initial public offering Margin Market anomaly Market capitalization Market depth Market manipulation Market trend Mean reversion Momentum Open outcry Public float Public offering Rally Reverse stock split Returns-based style analysis Share repurchase Short selling Slippage Speculation Stock dilution Stock market index Stock split Trade Uptick rule Volatility Voting interest Yield

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Tracking stock

Examples

See also

References

External links