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Vijh Says Tracking Stocks Perform Poorly

The track record of tracking stocks is not good, said ANAND VIJH, a professor of finance at the University of Iowa, in a story about MCI stock. They lag far behind other stocks in their own industries as well as the market as a whole, Vijh concluded after looking at all the tracking stocks issued between 1984 and 1998. Over the past three years, the new tracking stocks underperformed the market by an average of 40 percent and the shares of the original company performed about the same as the rest of the market. "The shareholder of the old stocks didn't do that badly," he said. "The new shareholders of the tracking stocks did quite badly."

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