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Billett: Shares Are Too Complex

General Motors, the originator of tracking stock, is retiring its last such issue in a deal that treats G.M. quite differently from the investors who bought the stock. G.M. will get $3.3 billion in cash, and a stake in the News Corporation, Rupert Murdoch's holding company, from the disposal of Hughes Electronics, whose principal asset is the DirecTV satellite television business. Members of the public who invested in Hughes through G.M. Class H shares will get a quite different deal, consisting of stock in Hughes and in the News Corporation, but no cash. Tracking stock was supposed to be a bit like real stock, but not exactly. Legally, it was stock in the parent company, but it was entitled to dividends based on the operations of a part of the company. The parent company would report earnings for that subsidiary, and it was hoped that investors would value the tracking stock in a different manner from that of the parent, increasing the overall market value of the parent company. MATTHEW T. BILLETT, an assistant professor of finance at the University of Iowa who has studied tracking shares, said yesterday that many companies that have eliminated tracking stocks have pointed to the advantages of a simplified capital structure. "They said it created too much complexity and confused investors," he said.

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