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Tracking Stock Study Cited

Sprint may promise crystal-clear service for its customers. But deciphering Sprint's financial health can be complicated for shareholders, thanks to an increasingly rare stock structure that also raises potential conflict-of-interest issues. Those issues result from the peculiarities of Sprint's two tracking stocks. A Wall Street creation whose popularity surged during the late 1990s, tracking stocks are less prevalent nowadays. At Sprint, one stock tracks the performance of the traditional business, called FON Group, and the other its wireless business, PCS Group. Over the past two years, PCS's stock is down 83 percent, more than the decline of its peer group, while FON's 44 percent decline isn't quite as bad as its peers. Generally, tracking stocks have underperformed peers, say University of Iowa business school professors MATTHEW T. BILLETT and ANAND M. VIJH.


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