News & Events

Tracking Stock Study Cited

Another tracking stock bit the dust this week, as Sprint said it would merge its wireless tracker with the parent company's stock. Will anyone mourn the trackers' passing, aside from the bankers who earned fees from them? Trackers were fashionable in the boom years, but now look so last century. The idea was to allow companies to tap into investor enthusiasm for 'new-economy' businesses that might be buried within a stodgy corporate whole, without requiring the parent company to give up control of any assets. The result was often disappointing. A new study by MATTHEW BILLETT and ANAND VIJH of the University of Iowa found that the tracking stocks in their US sample underperformed several benchmarks by an average of more than 12 per cent per year in the three years following their creation.

Return to top of page